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XAU/USD: in anticipation of NFPR data on Friday on 02.03.2016

Since mid-February gold has been steadily traded above the level of 1200.00 USD per ounce. After reaching the highs at the level of 1260.00, the price slightly fell; however demand for gold is still high. Today with the opening of the trading day world stock indices try to continue upward movement started yesterday due to positive US economic data; however, later at European session the indices started to lose positions and move to the negative zone amid declining oil prices. Gold in this situation acts as counter-instrument and then stock indices are declining, the price of gold is usually going up.

While all the US news is positive, Chinese data is all negative. As it became known yesterday, index of purchasing managers in the manufacturing sector of China fell to the 4-year low (49.0 against the forecast of 49.0 and 49.4 in January). Chinese economy, the second in the world after the USA continues slowdown. Deterioration of the Chinese economy is caused by overcapacity and low demand.

At the meeting of G20 last weekend Finance Ministers did not reach agreement on stabilization of international markets and economic growth incentives. The meeting also predicted gloomy prospects of the global economy. All these facts have negative impact on prices of commodities and commodity currencies and support demand for safe-haven assets, including gold.

On the other hand, deterioration of the economic situation in Eurozone might force ECB to introduce additional incentive measures.

American statistics shows improvement in the economic situation of the USA, which may increase investors’ expectations that tight monetary policy in the USA will be continued. These two factors will balance demand for gold putting pressure on the price of this precious metal.

On Friday 15:30 (GMT 2) the data on NFPR will be released (number of new jobs outside agricultural sector).

In case of the positive data, demand for risky assets and commodities will go up. The USD will strengthen and gold may go back below the level of 1200.00.

Otherwise, pessimistic sentiments will prevail in the market and the price of gold will grow.



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