London 13/04/2012 -

After pausing Wednesday gold resumed its upwards swing yesterday, testing to its best level in over a week as a larger than expected increase in jobless claims sparking concerns the US economy could still be in need of further fiscal stimulus measures in order to bolster stalling economic activity. The yellow metal touched a late peak of $1680 shortly before the close with the gains boosting sentiment across the rest of the complex as platinum settled up 1% while silver and palladium both finished up more than 2%; the complex closed up a net 1.7%.

Equity markets shrugged off the weak jobs and tame inflation data, instead remaining buoyant following Wednesdays rebound; the Stoxx 50 settled up 0.4%, the Dow & S&P500 posted stronger gains 1.4%. The dollar did lose ground though as QE3 expectations increased. The Dollar Index settled down a modest 0.4% while the euro finished up 0.5% against the dollar and yen as peripheral bond yields remained steady despite weak demand for Italian debt as the country auctioned €5bn of bonds.

Risk sentiment has been steady overnight with the MSCI Asia Pacific Index up 1.5% at the time of writing and the Nikkei 1.2%, however sentiment has weakened somewhat since the release of weaker than anticipated growth data from China showing the economy grew by 8.1% between January and March, less than the 8.4% pace forecast and down from the previous quarters 8.9%. European futures are pointing to a weaker start with FTSE futures off 7-pts. The dollar was slightly steadier at the time of writing with the DXY up 0.1%, the euro was little changed against the dollar and yen.

Other data from China has shown an improvement in Industrial Production from 11.4% to 11.9% and Retail Sales from 14.7% to 15.2%. The line-up for the rest of the day includes UK PPI, US CPI and UoM Consumer Sentiment. Fed Chairman Bernanke is also due to speak with players again likely to closely scrutinize his speech for comments/indications on the economy and the need for QE3.

Gold and silver have both seen a steady start so far while the PGMs have lost ground as profit taking emerged in reaction to the Chinese data; the complex is currently off a net 0.3%. Gold has made good gains over the course of the week and with technical indicators still relatively neutral suggests there remains plenty of room above for gold to extend. Gold still has to conquer trend-line resistance around $1680 and reclaim the 200DMA in order to improve short to medium-term sentiment, but the weaker growth from China will only heighten expectations further monetary easing may be in the pipeline which will serve to further boost gold as investor seek a store of wealth to offset currency debasement.

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