Gold breaks $1300 for second Valentine's

While there is certainly no correlation between gold prices and Valentine’s Day, it does seem rather ominous that prices have succeeded in breaking above the $1300 level for the first time in exactly a year. 

The weaker US dollar has added to the precious metal's upside but, given that we’re a significant distance from the all-time highs seen in September 2011, the jury remains out on whether the current moves smack of a dead-cat bounce or a reversal in the overall trend.

Silver and gold mining company Fresnillo added 5.5% as they move a step closer to lifting the explosives ban in Mexico. The weak mining sector was the main reason that the FTSE 100 underperformed against its European counterparts last year, but current investor appetite for the sector's constituents is much stronger. Nevertheless, the FTSE 100 is currently lagging behind the likes of the DAX and the CAC as the financial sector drags. 

Morrisons has been subjected to a broker cut and has taken the bottom spot on the index, shedding 1.78%. The chain has proved somewhat helpless in defending itself against the impact of budget supermarkets, as Aldi and Lidl's market shares continue to grow.

Activity continues to recover in the eurozone. While the political shenanigans in Italy are providing a Groundhog Day backdrop to proceedings, investors are choosing to focus on the better-than-expected GDP numbers from France, Holland and Germany. The overall GDP number for the area also beat consensus, coming in at 0.3% in the fourth quarter.

The euro is a currency that refuses to bow to broader sentiment; the buoyant single currency is on the front foot again, testing the $1.37 level in early trade. 

The Dow Jones has once again made progress through the 16,000 level. Industrial production and consumer sentiment data due out later this afternoon will ultimately help investors decide if this is warranted.

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.