Gold whipped as traders eye data - 4 January 2007

Gold has whipped in a $5 range since New York opened for business. Both the Dollar and Sterling have also made violent moves.

"We're very data-dependent," as one Chicago gold dealer noted to Bloomberg earlier.

UK investors today got news that house-price inflation has soared yet again. But it couldn't help Sterling recover the 3 cents it's lost vs. the Dollar since in the last two days, not with another report showing that consumer confidence has slipped again.

US investors meantime learnt that US factories grew their order books by 0.9% in November after a decline of 4.5% in October. But another report showed fewer sales of existing US homes the same month.

So which direction will US interest rates and the Dollar take when the Fed meets at the end of this month?

"Rate cuts could weaken the Dollar and support gold," the Chicago gold dealer noted. Tomorrow's key payroll data from Washington could signal a big move in gold if traders use it to second-guess Fed policy.

"I'm not looking for this market to roll over," says Stephen Platt, a commodity analyst at Archer Financial Services in New York. "I'm still looking for weakness in the Dollar. On the breaks, you're going to see the support come back in. Gold can find buyers at this point."

Copper continued to drop hard today, and crude oil prices also fell further on warmer weather in the north-eastern United States. WTI Nymex hit $57.32 per barrel earlier today in New York.

"Falls in energy prices and other commodities, such as copper and other base metals, are worrying," according to one market analyst, "but gold will continue to draw a lot of safe-haven demand with the situation in Iran unresolved and continuing tension in the Middle East."

If you're at all concerned about the impact politics could have on your money, you may be interested to read this lesson from history – click here now...