Gold is steady on Monday, following sharps gains on Friday. In the European session, the spot price stands at $1166.93. It’s a quiet day on the release front, with no US releases until Thursday.
Gold prices jumped about 3% on Friday, as the metal reversed directions following sharp losses during the week. Gold took advantage of a weak US Nonfarm Payrolls report, which were well below expectations. Gold hit a low of $1130 last week, its lowest level since April 2010.
Mario Draghi and his ECB colleagues haven’t had much to cheer about lately, with the Eurozone stuck with low growth, weak inflation and high unemployment. Draghi has lowered interest rates to the bone, but the cuts have not improved the economic situation. The ECB has decided to focus on its balance sheet and has issued long-term loans to banks and purchased covered bonds. The ECB will begin buying asset-backed purchases later this month, so we could see the wobbly euro lose more ground. However, these moves may not be enough and Draghi may be forced to borrow a page from the book of other central banks and commence quantitative easing, which is the purchase of government securities.
US Nonfarm Payrolls disappointed on Friday, as the key employment indicator slipped to 214 thousand, well short of the estimate of 235 thousand. On a brighter note, the Unemployment Rate slipped to 5.8%, its lowest level in six years. On Thursday, Unemployment Claims fell to 278 thousand. This was better than the estimate of 285 thousand and marked a three-week low.
XAU/USD 1166.93 H: 1177.74 L: 1166.64
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