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Friday, January 09, 2009

Lackluster trading in Gold as Nonfarm payroll takes centre stage

COMEX Gold moves in a range of less than 10 dollars as traders stay out ahead of data tipped to be one of the worst ever

Gold moved sideways in a very narrow corridor today, with the global market entering into a protracted period of calmness very much associated ahead of the US non-farm payrolls. The data is widely tipped to be one of the worst figures so far and the unemployment rate would continue to rise as all of the leading indicators for non-farm payrolls point to more job losses.

Earlier in the week, the US private sector payroll provider ADP reported that 693,000 jobs were cut last month. Given that non-farm payrolls came out worse than the ADP report every single month last year, the job losses in December could have been the largest in 5 decades. Unemployment rolls are also continuing to grow with the 4 week average of jobless claims and continuing claims at 26-year highs.

A range of less than 10 dollars in the benchmark COMEX Gold futures reflected a lack of active trading on the last day of the week. However, after the data may, we may see some intense moves in the Euro/USD pair and a break below $850 in COMEX Gold could mean some further profit selling in the commodity.

In other major economic news today, Euro zone inflationary pressures fell in November to the lowest level in 3-1/2 years, a forward-looking indicator showed on Friday, suggesting inflation will drop sharply again in coming months.

The New York-based Economic Cycle Research Institute said its Eurozone Future Inflation Gauge, which aims to predict cyclical turns in inflation in the next six to nine months, fell to 97.9 in November from 102.1 in October.

Official inflation in the euro zone tumbled more than expected to 1.6 percent year-on-year in December, falling below the European Central Bank's ceiling of close to but below 2.0 percent for the first time since August 2007.

This could make the Euro vulnerable as the benign inflation data counters the hawkish warnings by the ECB officials off late. The central bank may cut the rates next week and this may give US dollar every reason to cheer, particularly if the tonight's non-farm payrolls are around the expected figures.

On the domestic front, the MCX Gold futures for February remained on the lower side in the afternoon, giving its earlier gains. The counter trades at Rs 13360 per 10 grams, down Rs 69 or 0.51% from the previous close with 5.70% decline in the open interest. Traders have to watch out for Rs 13210 threshold in case the prices break below Rs 13300.

source: Capital Market
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