The U.S. Comex gold futures surged 1.43 percent this week, ending at $1,796.50 after rising 5.09 percent in September. The S&P 500 index and the Euro Stoxx 50 index also jumped 1.44 percent and 1.28 percent week-to-date while the Dollar Index retreated 0.73 percent this week. At the open of Asia on Friday, gold futures attempted to push through $1,800, trading at around $1,798, the highest level since 8 November in 2011 when gold futures reached $1,804.40.
After reporting a headline manufacturing PMI of 49.8 in September, China reported a September non-manufacturing PMI of 53.7, the lowest level since the data was reported starting March 2011. In the most recent week, the U.S. jobless claims rose to 367,000 compared to a Bloomberg median estimate of 370,000. The September U.S. non-farm payrolls report and unemployment rate will be closely watched on Friday to see if the labour market has improved and for the market to evaluate when the open-ended QE3 may come to a stop.
Gold prices were boosted by various news this week. On Thursday, the ECB announced interest rate would be on hold at 0.75 percent and the bond-purchase program stood ready to be tapped although takers have not shown up. The U.S. Fed also released its September FOMC meeting minutes revealing that members were generally united for the QE3 program and some were pushing for tying the time period for a zero interest rate policy to numerical benchmarks on inflation and unemployment rate. The Middle-Eastern tension in Syria and the decision by the Turkish government to launch military actions against Syria have pushed up volatility in the oil prices but helped gold prices.
Gold price sentiment has continued to surge - traders have made the biggest bets on gold rally since seven months ago, the gold-backed ETP holdings have reached another record high at 2,565 metric tons while UBS has recently seen Indian physical gold sales rise the most since April.
Important upcoming events to watch will include the September U.S. private payroll report and unemployment rate on 5 October, Holland-Rajoy meeting and the U.S. Fed Beige Book on 10 October, Chinese September new loans and M2 growth data on 11 October and the IMF/World Bank annual meeting during 12 to 14 of October.
Sharps Pixley, London