Commerzbank await more detail to help determine the future direction of gold
(Kitco News) -
Commerzbank's Daniel Briesemann has said in his latest note that gold is lacking any firm direction at the moment. Gold has not really recovered since the Fed-inspired drop. It was some U.S. central bankers who said that the taper from emergency pandemic QE should happen quickly and that this could give the Fed more space to raise rates if needed. Since then the price has consolidated just below $1800/oz and price action has continued to be lacklustre. Now the omicron variant is around it might just derail the plan but more information is needed.
Briesemann said, "The US labor market data compiled by the private provider ADP turned out to be a non-event for the US dollar and for the gold price. Showing 534,000 new jobs in November, they tallied almost exactly with the expectations of the Bloomberg consensus. What is more, they corresponded more or less to what the official US labor market report is expected to reveal when it is published tomorrow."
He added "The gold price, therefore, responded hardly at all to the data, initially defending the gains it had made in early trading. The ISM index for the manufacturing sector, which was published later in the afternoon, likewise failed to move prices because it was also in line with expectations. The gold price did fall again in late trading and overnight, however. This morning sees it trading below $1,780 per troy ounce. US Federal Reserve Chairman Powell confirmed what he had said the day before, namely that the Fed will have to remain vigilant with respect to inflation and that it is appropriate to discuss whether to end tapering more quickly. The concerns that have emerged on the financial markets about the new variant of the virus do not appear to be having any impact on gold, on the other hand."
Lastly, the report noted "Although the US Centers for Disease Control and Prevention (CDC) confirmed the first Omicron case in the U.S. yesterday and the variant is continuing to spread in many countries, gold was not in demand as a safe haven. The silver price dropped by over 2% to a two-month low of only a good $22 per troy ounce yesterday. We have not been able to identify any reason for the price weakness, however. Though Bloomberg reported outflows of 26 tons from the silver ETFs for yesterday, we would classify these as moderate. The gold/silver ratio has climbed to nearly 80, its highest level since the end of September. Silver has underperformed gold of late, in other words."