Gold gained for a second session on Thursday as investors sought the safety of the metal after the People’s Bank of China expanded measures to fight slowing growth amid uncertainty in Europe.
Comex gold for delivery in April was up 0.20% at $1 267.0 per troy ounce at 08:30 GMT, shifting in a daily range of $1 274.6-$1 265.3. The precious metal ended the previous session with a 0.33% gain to $1 264.5.
Greece’s anti-austerity Syriza party, which had promised to wipe off the majority of the countrys debt during its election campaign, proposed to swap its old debt with new bonds that would be repaid as the country’s economy expands.
However, the European Central Bank said in a press release issued late Wednesday that it will stop accepting Greek sovereign debt as collateral for its liquidity operations starting February 11th.
The decision was based on the assumption that there will be no successful conclusion to Greeces negotiations with creditors, ECB said. The move will increase funding expenses for Greeces commercial banks, while also putting them under close observation by the central bank.
On Thursday, Greeces Finance Minister Yanis Varoufakis said in a statement that the decision “does not reflect any negative developments in the countrys financial sector.”
The news came out just a few hours following the meeting between Mr. Varoufakis and ECBs president Mario Draghi in Frankfurt. Mr. Varoufakis is also meeting with Wolfgang Schaueble, Germanys finance minister, later today. Previously, Greeces finance minister met with officials from the UK and France.
“We think the Greek issue will likely stir things up for a little while longer in the markets, which is why we think gold should benefit, likely at the expense of equities,” INTL FCStone analyst Ed Meir said in a note, cited by CNBC.
Meanwhile, the PBOC reduced yesterday the required minimum of reserves that commercial lenders must hold by 1% to 19.5%, outlining efforts to increase liquidity.
Last moth, the International Monetary Fund reduced its projection of global growth.
In the US, data by Automatic Data Processing showed yesterday that private non-farm employers added 213 000 jobs in January, while the Labor Department is expected to report today that the number of Americans who filed for initial unemployment benefits last week rose to 290 000 from 265 000 the previous period.
Analysts now eyed Friday’s all-important jobs report, with the Labor Department expected to report non-farm payrolls at 234 000, while the unemployment rate likely remained unchanged at a multi-year low of 5.6%.
A robust report will help slightly offset increasing speculations that the Federal Reserve will hold back on raising interest rates. An eventual rate hike would boost the strength of the dollar, while also denting demand for the yellow metal.
The US dollar index for settlement in March was up 0.24% at 94.395 at 08:29 GMT, holding in a daily range of 94.665-94.230. The US currency gauge edged up 0.47% on Wednesday to 94.165. A stronger greenback makes dollar-denominated commodities more expensive for holders of foreign currencies and curbs their appeal as an alternative investment, and vice versa.
Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, climbed 2.99 tons on Wednesday to 767.93 tons, their highest since early October. Changes in holdings typically move gold prices in the same direction.
Pivot Points
According to Binary Tribune’s daily analysis, April gold’s central pivot point on the Comex stands at $1 264.9. If the contract breaks its first resistance level at $1 272.9, next barrier will be at $1 281.3. In case the second key resistance is broken, the precious metal may attempt to advance to $1 289.3.
If the contract manages to breach the S1 level at $1 256.5, it will next see support at $1 248.5. With this second key support broken, movement to the downside may extend to $1 240.1.
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