Gold is showing limited movement on Friday, continuing the trend which has marked XAU/USD for most of the week. In the European session, the spot price stands at $1222.41. In the US, there are two major events – Producer Price Index and the UoM Consumer Sentiment. The inflation index is expected to show a small decline, but the markets are anticipating that the consumer confidence report will continue its upward trend.
US retail sales reports, the primary gauge of consumer spending, looked sharp in November. Core Retail Sales came in at 0.5%, ahead of the estimate of 0.1%. Not to be undone, Retail Sales posted a gain of 0.7%, beating the estimate of 0.4%. This was the indicator’s strongest showing in 12 months. There was more good news on the job front, as Unemployment Claims dipped to 294 thousand, below the forecast of 299 thousand.
The euro showed little response to the ECB’s second TLTRO (Targeted Long Term Refinancing Option) on Thursday. This lending program aims to bolster the economy by increasing bank lending to the real economy. The auction in saw European banks take loans of about EUR 130 billion. Although this was higher than the September auction, which had a take-up of EUR 82 billion, the total of around 212 billion was only half of the ECB target of 400 billion. The disappointing figure means that the ECB remains under strong pressure to introduce QE early in 2015, which would likely push the euro to further lows. Meanwhile, the Eurozone continues to struggle with low inflation levels, with a senior ECB official warning of deflation dangers. Speaking in Washington on Tuesday, ECB board member Peter Praet said that falling oil prices could push Eurozone inflation into negative territory.
XAU/USD 1222.41 H: 1226.79 L: 1217.44
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