Gold has dipped under the key level of $1300, as the spot price stands at $1298.67 per ounce late the European session. The metal has now slipped about 2% in little over a week. In the US, Unemployment Claims looked excellent, dropping to its lowest level in over eight years. New Home Sales will be released later in the day.
Unemployment Claims dropped unexpectedly last week, as the key indicator fell to 298 thousand, its lowest level since February 2008. This continues a string of strong employment data, and the dollar could get a boost from the good news. Earlier in the week, Core CPI posted a paltry gain of 0.1%, shy of the estimate of 0.2%. The key index has looked anemic in 2014, with its highest gain this year at just 0.3%. CPI was bit stronger, as it gained 0.3% last month, matching the forecast. On a bright note, Existing Home Sales jumped to 5.04 million, surpassing the estimate of 4.94 million. This was the best showing we've seen since October, and follows a disappointing release from Housing Starts, which was published last week.
Geopolitical tensions are bad news for the markets, which crave stability. With violence continuing in Ukraine and Gaza, nervous investors have rallied around the safe-haven US dollar as well as gold, at the expense of other currencies. In Ukraine, the downing of a Malaysian Airlines jet, apparently by pro-Russian separatists, has seriously frayed relations between the West and Russia, which have already been strained since the latter annexed Crimea. Fighting continues between the separatists and Ukrainian forces in Eastern Ukraine. The Europeans are threatening stronger sanctions against Russia, and escalating tensions in eastern Ukraine could shake up the markets. In the Middle East, the fighting in Gaza between Hamas and Israel has intensified, as Israel presses on with a ground offensive and casualties rise. The international community is intensifying efforts to broker a cease-fire, but in the meantime the fighting rages on.
XAU/USD 1298.67 H: 1304.85 L: 1294.89
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