The Daily Nugget – the week ahead

Today the gold price has the Monday blues having lost more than half a per cent this morning already, set to post its biggest one day loss in three weeks. Some analysts see support being found at $1,757/oz today, with bids to buy gold bullion in greater size being noted. Silver has also fallen, to its lowest level since 26th September.

Spot gold looked like it would break through $1,800 last week, and whilst it didn’t quite make it the most-active December contract to buy gold on COMEX settled at $1,780.80.

What knocked the gold price?

Gold is down thanks to both the US jobs data and speculation regarding the Eurozone crisis.

The news last week that the US unemployment rate had ‘unexpectedly’ fallen to 7.8% led to some doubts as to whether Bernanke would need to run the printing presses for as long as expected. This has put pressure on gold in the short term as we see some short-term profit taking. Later this week the US trade balance is expected to show some improvement, this is likely to cause a fall in the gold price.

Today is a busy week for the Eurozone. Greece is looking forward to welcoming Chancellor Merkel tomorrow; a reported 6,000 police officers are in place to protect her from anti-austerity protestors. She may well remain in a good mood however as trade balance figures released this morning show an improvement for Germany, industrial production is expected to have declined however.

Later this week Prime Minister Rajoy will meet President Hollande. Observers will be watching to see if Spain will end up requesting a bailout; this will prove to be bullish for gold if the bailout goes ahead.

This week China returns to the market after a week’s holiday, recent data shows that growth is slowing down in the world’s second-largest economy and may well slow for a seventh quarter. Some observers are expecting their return to the market to provide some support to the gold price.

This week, tomorrow especially, is a busy one for UK data, various production data is set to be released as well as the British Retail Consortium’s figures which will present sales data for September. After last month’s disappointing data following the Olympics, sales are expected to have still fallen but not as dramatically as seen in August.

Geo-political tensions will also be something to watch this week as the situation in Iran continues, as well as the military tensions between Turkey and Syria. As long as tensions remain high or if the situation escalates, this will prove to be bullish for gold and provide some support.

The drop in the unemployment rate, just before the November elections has caused some controversy. Jack Welch, former CEO of General Electric caused a Twitter storm on Friday when he tweeted ‘Unbelievable jobs numbers. . . these Chicago guys will do anything. . . can’t debate so change numbers.’ Romney appeared to support these comments when he told 6,000 people on Saturday night that the unemployment rate would be much higher were it still calculated in the same way it had been when Obama came to office.

Whether manipulated or not, this adds to increasing frustrations that government supported data  can be so easily affected depending on how many ways they can find to measure the data according to their policies and campaigns. Here in the UK this is a current issue regarding the calculation of the RPI, a number which affects millions of pensioners who will get no say in the matter of how their pensions are tracked.

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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