Gold volatile following positive US data

A choppy reaction to US data has eventually seen gold head higher.

Markets had been expecting an improvement in the US non-farm payroll figures and unemployment rate, and the fact that the latter has fallen to 7% will give further fuel to those hoping to see the Federal Reserve start to reduce its debt purchasing scheme before the end of the year. Like the UK, the Fed has advised markets that unemployment levels are one of the key pieces of data that will be used to judge the economy’s ability to handle a reduction in the stimulus process. Today’s figures certainly go a step further to enabling the voting members of the Federal Open Market Committee to do that.

At the time of economic data releases, volatility increases as instant judgments are made, and not always accurately. Today was no exception, but almost an hour after the release of the figures gold has settled down and is now trading around the $1233 level, having fallen to $1214 almost instantly and within 30 mins trading as high as $1244.

In the short-term a break below $1200 could signal further weakness, but holding above it might instigate a fresh test of the well-entrenched downward trend.

Gold chart

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.