Gold Price Not Following the Consensus
The U.S. Comex gold futures rallied in seven consecutive days, rising 2.95% this week and 8.13% year-to-date. The gold futures have remained above $1,300 during Asia’s Friday morning after breaching this level on Thursday. The Dollar Index declined 0.46% week-to-date and has rallied 0.35% this year. The S&P 500 Index and the Euro Stoxx 50 Index have risen 1.89% and 1.96% respectively this week after a positive week last week.
Weaker U.S. Data Drove Up Gold Sentiment
The
January U.S. retail sales declined 0.4% versus an expectation of no
change while the jobless claims jumped to 339,000 versus an expectation
of 330,000. Both the cold weather and the expiration of the jobless
benefits were to blame for the weaker numbers according to Bloomberg.
Nevertheless, the world stocks have shrugged off the bad news and went
up 1.95% this week while the gold prices also rallied 2.95%. While the
media have conveniently attributed the fall in the gold prices to
surging U.S. stocks, the daily correlation between the gold futures and
the U.S. stock prices in the past two years is actually a positive 0.17
while that between the gold futures and the Dollar Index is a minus
0.405.
Consensus not Always Right
Even
though the sell-side analysts’ sentiments on gold prices continue to be
bearish for this year, the gold futures have beaten major financial
assets since the Fed has started to taper on 19 December, 2013. Cheap
valuation and positioning have driven the prices up by 8.92% since then.
In fact, the U.S. SPDR gold trust holdings have climbed five metric
tons year-to-date to 806.35 metric tons.
What to Watch
Next
week, we will watch the Q4 preliminary GDP of Japan on 16 February, the
U.S. January housing starts, and the U.S. January FOMC minutes on 19
February as well as the February flash manufacturing PMI from China, E18
and the U.S. on 20 February.
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14 Feb 2014 | Categories: Gold