This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The US non-farm payrolls report, which came in below analysts’ estimates, gave an indication to the market that the US Federal Reserve will not reduce its $85 billion per month bond-buying programme until the first quarter of 2014.
While the Fed keeps its stimulus package in place the US dollar will remain under pressure, making it relatively cheaper to buy gold. Gold reached its highest level yesterday since the end of September, and today, though we have seen some sellers, the price is still well above the pre non-farm payrolls level of $1320.
Overnight, the Industrial & Commercial Bank of China reported a large increase in the number of bad debts, which worried investors as it’s not the first time there have been concerns over the Chinese banking system. If other banks in China start to report defaults on loans we could see investors take their cash out of equities and invest in gold.