Gold Stable Ahead of ECB, Unemployment Claims

Gold is steady on Thursday, with a spot price of $1287.64 per ounce in the European session. The metal is in a holding pattern as the markets await a likely QE announcement from the ECB later in the day. There is also concern about the Greek elections on Sunday, as the Syriza party, which has promised to tear up Greece’s bailout agreement, leads in the polls. In the US, today’s highlight is Unemployment Claims, with the indicator expected to dip to 301 thousand.

Gold has taken a breather from its impressive run as it trades close to the $1300 level. Gold has been a winner from the recent volatility in the currency markets, as investors have looked to gold as a safe haven in recent weeks. The metal has posted strong gains since the SNB announcement last Thursday, when the SNB suddenly abandoned its cap that set EUR/CHF at 1.20, sending shock waves across global markets. This resulted in the euro recording sharp losses against the Swiss franc and the US dollar.

As the markets nervously eye the ECB policy meeting on Thursday, is this the calm before the storm? On Wednesday, French President Francois Hollande stated flat out that the ECB will announce a quantitative easing package at the ECB meeting. However, now that a QE is likely priced in, the question remains what will be the size of the program? The markets are anticipating QE of between EUR 500-600 billion, but some market players are saying that the ECB could go as high as EUR 800 billion. Will the euro take a hit on Thursday? The likelihood is yes, unless the ECB surprises with a “QE lite”, such as EUR 300 billion, which would be well below expectations.

XAU/USD 1291.75 H: 1303.38 L: 1290.15