The Daily Nugget: Gold Rises On Unrest In Egypt, Europe's Debt Crisis

Whilst the gold price appears to have remained cautious this week, it has gained 2% due to fears over Egypt, the debt crisis in Europe and the non-farm payroll data release tomorrow each of which have prompted some gold buying.

Further unrest in Egypt after a military coup has provided support to the gold price on the back of safe haven buying. The oil price is the one everyone is watching though when it comes to the north African country.

Political turmoil in Portugal also added to the discomfort felt over the macro economy and spurred some into buying gold, the resignation of two key ministers yesterday in protest of the austerity measures, will make many nervous about the euro. Concerns over Greece’s ability to meet its debt obligations have also prompted some safe-haven buying. Most European bond yields rose yesterday, apart from Germany whose bonds experienced some safe-haven buying.
Gold ETFs stay quiet for July 4th

Reports of the SPDR gold trust always seem to be bad news, however yesterday they remained unchanged at 964.9 tons.

Today is likely to be quiet for both and silver thanks to the Independence Day holiday in the US, when markets are closed.

Many will be looking ahead to tomorrow’s non-farm payroll data which many hope will give some indication as to whether or not the FOMC will begin to taper its $85 billion monthly bond buying stimulus. Everyone will be looking out for the key number of 160,000 and an unemployment rate down to 7.5% in June, after May’s 7.6%.

I suspect that even if there is the slightest indication of an improvement in the labour market tomorrow this will be enough to drive gold lower, so high is the optimism over the US economy at the moment.

Listen to Draghi

Today two central banks meet to discuss rates, however their impact on the gold price is not expected to be anywhere near as great as tomorrow’s non-farm payroll data. Mark Carney will attend his first MPC meeting, whilst Draghi will head up the ECB meeting. No change is expected from either. Mark Carney, unlike Draghi, is not expected to give a press conference following the meeting. Draghi’s ability to rock the market with very few words is something to be looked out for during his own press conference.

Draghi is expected to be dovish in the press conference, even more so given developments in Portugal. Should the euro fall against the dollar, it will be a soft fall given the closure of US markets today.

The influence of the ECB on markets appears to be waning somewhat given the persistently high (and climbing) unemployment levels in the single currency union.

The Perth Mint released their latest figures yesterday which showed that whilst some coin dealers had taken advantage of the low prices, they hadn’t done to quite the extent seen in April. June was the second consecutive month of declines in bar and coin sales at the Mint.

The Perth Mint’s numbers are reflective of activity in other major mints across the world, for instance the US Mint saw a fall in sales from 209,500 in April to 70,000 ounces in May and 57,000 ounces in June.