By From Adrian Ash
As US Sheds Jobs, Fed Accused of Spurring “Currency War”
THE PRICE OF GOLD in wholesale dealing jumped against the Dollar at the start of New York trade on Friday after the Bureau for Labor Studies said US payrolls shed 95,000 jobs in September.
Earlier hitting a 3-session low beneath $1326 per ounce, the gold price had already recovered to $1335 before spiking – briefly – above $1340 on the news.
“The daily chart shows $1320 is an important pivot,” reckons Russell Browne at Scotia Mocatta, “followed by this week’s low of $1312.
“A lower close [on Friday] will trigger selling of the metal from shorter-term traders.”
“Consolidation is coming,” a Hong Kong dealer agreed to Reuters earlier.
“We’ve been expecting some correction for some time…But the bullish trend [in gold] is still here. We still have low interest rates, and the economy is not stable – the old story.”
Today’s poor US data forced a spike up in the Euro towards $1.3950, while the Dollar also slumped to a fresh 15-year low against the Japanese Yen below ¥82.
Japanese prime minister Naoto Kan said today that Tokyo wants to cooperate with its G7 partners, but will take “decisive steps” if the Yen keeps rising against the Dollar, thus making Japanese exports uncompetitive.
“I say to Europe’s leaders – don’t join the chorus pressing China to revalue the Yuan,” said Beijing’s premier, Wen Jiabao, mid-week.
Politicians from the 187 member states of the International Monetary Fund are now converging on Washington for this weekend’s annual IMF meeting, with what Brazil’s finance chief last week called the global “currency war” set to dominate proceedings.
“The [US] Fed…created the problem in the first place,” said Nobel Prize-winning economist Joseph Stiglitz in a speech at the Canadian Consulate on Wednesday.
“[Now] it feels guilty…But the consequence of [its zero-rate] monetary policy is competitive devaluation.”
Back in the spot gold market on Friday, prices for Eurozone investors also rose as the Dollar fell, but gold was little changed from last week’s finish at €30,100 per kilo.
Germany’s trade surplus slipped in August, new figures showed, but beat analyst forecasts at €11.7 billion.
New data also showed UK factory-input prices rising 0.7% last month from Sept. – some 9.5% year-on-year – as the British Pound slipped 2.3% on the foreign exchange market.
The gold price in Sterling rose to £840 an ounce today, while London’s stock-market also cut its earlier losses.
Crude oil fell through $81 per barrel.
“Thursday was a very crazy day,” says Swiss refinery group MKS in its daily note after Dollar-gold prices dropped almost $40 from a new record top of $1364, with silver prices “literally flying to the moon.”
Silver today rallied to $22.70 an ounce – some 3.5% below Wednesday’s new 30-year record, but more than 2.5% higher from last Friday’s close.
Adrian Ash
Gold price chart, no delay | Buy gold online at live prices
Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen’s Award for Enterprise Innovation, 2009 and now backed by the mining-sector’s World Gold Council research body – where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2010
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