BULLION LATEST 12/01: Gold prices rise after hawkish ECB, soft data sink dollar

The spot gold price rose during Asian morning trading on Friday January 12, after hawkish language contained in the European Central Bank’s (ECB) December meeting minutes and soft US data weighed on the dollar.

The spot gold price was quoted at $1,328.56-1,329.10 per oz as of 12.24pm Shanghai time, up by $6.45 from the previous session’s close. Trade has ranged from $1,322.85-1,329.15 so far today.

  • The yellow metal benefited from a weaker dollar following hawkish ECB minutes and disappointing US data overnight.
  • The dollar index was down by 0.5% at 91.81 as of 11:57am Shanghai time.
  • Earlier in the session, the index had reached a low of 91.69 - its lowest since October 20 when it fell to 91.42.
  • “Gold put in another strong showing after the hawkish ECB minutes weighed on USD sentiment,” Stephen Innes with Oanda said on Friday.
  • “Indeed, the weaker dollar narrative amidst increased demand for equity market hedges suggests the near-term outlook for gold is glittering,” Innes added.
  • “ECB minutes were interpreted on the hawkish side due to a discussion of a “gradual shift” in guidance from “early 2018” – much earlier than had previously been discussed,” ANZ Research said on Friday.
  • Disappointing data from the United States added to the dollar’s woes.
  • In US data on Thursday, the December producer price index fell 0.1%, against an expected increase of 0.2%, while unemployment claims rose to 261,000 this week, marking the fourth consecutive weekly increase and a more-than-three-month high.
  • Later, the market will be keeping a close eye on the US consumer price index (CPI) and retail sales releases, which may have some bearing on the dollar.

Silver, PGMs

  • In the other precious metals, the spot silver price rose $0.12 to $17.095-17.115 per oz. Platinum increased $8.5 to $988-993 per oz and palladium gained $6 to $1,088-1,093 per oz.
  • On the Shanghai Futures Exchange, gold for June delivery was recently at 281.35 yuan ($43.24) per gram, and the June silver was at 3,886 yuan per kg.

Currency moves and data releases

  • The dollar index was down by 0.05% to 91.81 as of 11.57am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up by 0.2% to $69.26 per barrel as of 11:10 am Shanghai time.
  • In equities, the Shanghai Composite was up by 0.1% to 3428.65 as of 11:30 am Shanghai time.
  • Data out already today showed China’s trade balance for December, in dollar-denominated terms, came in at a surplus of $54.7 billion, while the yuan-denominated balance stood at a surplus of 362 billion yuan, both surpassing expected and previous readings.
  • Later, US CPI and retail sales releases are of note.
  • In addition, German Federal Bank President Jens Weidmann is speaking.
  • Looking ahead to the weekend, key Chinese data including new yuan loans and M2 money supply are expected.
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