The Daily Nugget – the week ahead for gold prices

This morning it seems the gold price is still suffering a hangover from Friday’s dismal performance when it staged its biggest daily loss in over two months. The silver price has also felt gold’s pain and has fallen over 1.5%.

This morning gold prices have fallen to two and a half week lows following inflation data from China showed CPI had fallen slightly from 2.0% in August to 1.9% the following month. This, combined with export data showing a higher than expected growth in imports has driven down the gold and silver price as hopes of further stimulus from China are dampened.

Friday’s fall was thanks to US consumer confidence data which came in better than expected, once again driving down hopes that QE3 would go on to infinity. Consumer confidence is purportedly at a 5 year high, as global demand to buy gold bullion eased slightly.

Amidst falling gold prices, ETF investors buy gold

Despite the disappointing end to the week, holdings in gold backed Exchange traded products reached a record 2,582.98 Metric tonnes on Friday.

Eyes will now be on Thursday’s data dump from China which is expected to show a third quarter of weak growth this year, having slowed to its most sluggish pace yet in this financial crisis.

Here in the UK, minutes from the last MPC meeting to be released on Wednesday are expected to show an appetite for QE from some members, suggesting November will see another round announced. Inflation numbers are released on Tuesday, whilst retail sales data on Thursday will hopefully show a bounce back from a slow August.

In the US this week it’s mainly about housing data, a key indication for some on the economic revival. In the manufacturing sector, a further slowdown is expected to be reported on Thursday in the Philly Fed’s survey.

The pressure might be off everyone on Thursday and Friday however as all eyes will be turned towards the EU leaders’ summit. After warnings from the IMF last week (and a Nobel Peace prize -what?!). It will be interesting to what steps, if any, are taken towards further financial integration. Data wise however, this week doesn’t see much from the EU apart from the ZEW German investor sentiment reading, Eurozone inflation and current account data.

The EU summit will be an interesting one to watch in regard to gold investment, as any decisions regarding further plans for the Eurozone, particularly Spain, may provide a much needed boost to the Euro, helping the gold price.

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About the Author

Jan SkoylesJan Skoyles is Head of Research at The Real Asset Company, a platform for secure and efficient gold investment. Jan first became interested in precious metals and sound money when she met Ned Naylor-Leyland whilst working alongside him in the summer of 2010. Jan then went on to write her undergraduate dissertation on the use of precious metals in the monetary system. After graduating from Aston University in 2011 Jan joined The Real Asset Co research desk. Her work and views are now featured on a range of media including BBC, Reuters, Wall Street Journal, Mail on Sunday, Forbes and The Telegraph. She has appeared on news channels including Russia Today to discuss the gold price and gold investing. You can keep up with Jan's commentary by subscribing to our RSS feed Gold Investment News.View all posts by Jan Skoyles