Gold Recovers From Profit Taking!

By Tom Jennemann, Correspondent tom.jennemann@fastmarkets.com
New York 13/01/2012 – Gold on the Comex division of the New York Mercantile Exchange fell victim to a stronger dollar, disappointing US data and end-of-the-week profit-taking on Friday morning.

Investor attention has now turned to ratings agency S&P. Downgrades in the credit ratings of France and a number of European sovereigns could be announced later today, according to media reports.

Gold futures for February delivery were last down $16.30 at $1,628.30 per ounce, which is near the day’s low.

“We’ve seen a nice rally to start the year but the market is feeling a bit heavy,” a US-based trader said.

“The data hasn’t been great this morning and the euro has turned back below $1.27,” the trader said, adding that some players have cashed in winning positions ahead of Monday’s Martin Luther King holiday in the US.

Profit-taking first started to weigh on precious metals during New York trading on Thursday afternoon, Standard Bank said in a note.

“This downward momentum has continued into this morning’s trade. In addition, yesterday’s successful Italian and Spanish debt auctions have downplayed market fears over the eurozone debt crisis for now, which has seen support for precious metals from safe-haven buying fall away,” it added.

But strong investor in interest in gold and silver coins in the US has helped to underpin prices. Gold sales so far this month have already surpassed sales for the whole of December, while silver coin sales have reached 143 tonnes – exceeding sales for November and December combined – Barclays Capital said in a report.

Comex silver for March delivery was last down 50 cents at $29.630 per ounce.

In data, JP Morgan’s net income fell 23 percent in the fourth quarter. The US-based investment bank cited stock and bond market volatility caused by the eurozone’s sovereign debt crisis as one of the main reasons for its lacklustre earnings.

Additionally, the US trade balance for November fell to $47.8 billion compared to a forecast drop of $44.8 billion and against a previous $43.5 billion, while import prices dropped 0.1 percent in December from previous growth of 0.7 percent.

But data was not universally gloomy – the University of Michigan preliminary index of consumer sentiment for January rose to 74 from 69.9 at the end of December, which beat expectations of a reading of 71.1.

(Editing by Mark Shaw)

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