Gold & Oil Trading Up As The New Weeks Begins

Gold and oil rebounded in the Asian session. Precious metals are trading in the green as political stress levels raised a bit more as talks with Russia over the Ukraine conflict ended without any results and the Greek Premier took an aggressive stance towards the EU and the bailout/austerity requirements in his first major speech since his election. Gold added $2.70 to trade at 1237.30 after falling almost $30 on Friday after a stronger than expected Nonfarm payroll release.  Silver added 41 points to 16.735 while platinum added $1.10 to 1224.95. Greece’s Tsipras vowed to increase the minimum wage and halt infrastructure privatizations on Sunday, putting him on a collision course with creditors before an emergency meeting with euro-area finance ministers. Ukraine’s almost yearlong conflict enters a pivotal week with discussions to resume on Monday in Berlin aimed at preparing a summit for the leaders of Germany, France, Russia and Ukraine in Minsk, Belarus, on Feb. 11.

Gold traded in a narrow range in the early part of last week. But prices declined sharply on Friday. The global spot gold price moved between $1,255 and $1,286 per ounce through last week before declining to 1,228.48 in the final session. The US non-farm payroll increasing by 257,000 in January and a sharp revision in the payroll data for November and December triggered this fall. Also, the average hourly earnings of employees rose 2.2 per cent on a year-on-year basis after falling to 1.9 per cent in December. All this positive data overshadowed the rise in unemployment rate to 5.7 per cent in January from 5.6 per cent the month earlier.

This week will be very light for economic data releases from the US. The retail sales data on Thursday is the only important number from the US, apart from the regular weekly jobless claims that would be released on the same day. The dollar index is trading at 94.68. The outlook is bullish. A strong break above the immediate resistance at 95 can take the index higher to 95.65 in this week. Further surge in the dollar index could keep the gold price under pressure in the short term.

Helping lower market stress was a climb in oil prices. This morning crude oil added 60 cents to 52.30 while Brent oil gained 33 cents to 59.01. Speculators cheered signs of a dip in North American crude production, while a robust US jobs report also provided support, analysts said.  A survey by US oil services firm Baker Hughes released Friday showed the number of rigs drilling for oil in the United States fell 83 to 1,140 in the week to February 6. The dip followed a cut of 94 rigs in the previous week.  Bloomberg News reported that the rig count was standing at its lowest level since December 2011.  The drop, coupled with announcements of deep cuts in capital spending by major oil companies including BP and BG Group, suggests there will be tighter supplies in the future.  Oil prices have plunged by about 50 per cent from their June peaks, largely owing to a surge in global reserves boosted by robust US shale production.