Gold continued its New Year rally, though dipping from the week’s highs of around $1662 set on Thursday to close the week at $1638.70, a rise of 1.4% on the week.
The gold price struggled to make headway on Monday and Tuesday, as early season company reports in the United States seemed to point to a better corporate climate and a meeting between Germany’s Merkel and France’s Sarkozy showed a hardening of attitude toward the Greek debt problem.
However, as the week progressed, economic figures from the US showed a mixed macroeconomic background developing in contrast to the better climate that had been foreshadowed by the last couple of months’ economic releases. Weekly jobless claims edged back up toward 400,000, retail sales numbers for December were on the disappointing side, and the trade deficit widened to over $47 billion in December.
On the other side of the Atlantic, rumours that Standard and Poor’s, the rating agency, would downgrade the credit ratings of Eurozone countries came to fruition on Friday. The only country unaffected by the move was Germany. The ratings of France, Spain, Italy, Portugal and Austria were all lowered, and all other Eurozone countries put on alert of further downgrades. Though this happened after the market close, the move on France’s rating was conducted during open hours. The lack of immediate follow through saw the gold price drift a little through the day.
Key levels for gold see good support at $1605, and resistance developing at $1645 and $1662.
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