INTERNATIONAL. The U.S. Comex gold futures fell 0.76% to US$1,609.4 on Thursday. Gold prices have surged 3.8% since last Thursday, boosted by the initial market optimism towards the EU Summit's conclusions.

Having jumped 3.38% since last Thursday, the S&P500 was down 0.47% on Thursday, while the Stoxx50 retraced 1.53%, after having surged 7.54% since last Thursday.

The Euro/Dollar fell to 1.2384 as of Friday morning in Asia, giving up all of its gains since the announcements at the EU Summit on 29 June, while the Dollar Index is now at 82.836, back to the level on 28 June.

The U.S. dollar index rebounded while the Euro/Dollar sold off. The U.S. unemployment claims fell 14,000 last week to 374,000, and the private employers added 176,000 jobs, while the ECB cut rates by 25bp on Thursday, supported by the worsening economic contraction in Europe.

Prior to the ECB announcement, China also cut its lending rates by 31bp and the deposit rates by 25bp, in order to stimulate lending growth, and to keep its economic recovery on track in 2H 2012.

The Bank of England restarted its bond purchasing program or quantitative easing measures, citing higher banks' borrowing costs because of the worsening credit crisis in Europe.

Gold was not able to extend its gains from last week, despite the global central banks' efforts to stimulate their economies. In the short-term, disinflationary forces around the globe, and the concern that the U.S. might not need to do QE3, are putting a damper on gold's advance.

However, a number of houses including Goldman Sachs and Societe Generale are still calling for a QE3 in the U.S., and expect the gold prices to be well-supported by a lower real interest rate.

While the European crisis deepens, investment demand for gold has continued to climb. The holdings in gold-backed ETPs rose to 2,413.61 tons, an all-time high, as of Wednesday, according to Bloomberg. Blackrock reported that investors switched out of the U.S. Treasuries ETPs and added US$2.2 billion to gold-backed ETPs in June.

All eyes will be on the U.S. June non-farm payrolls change on Friday, with the median forecast at 100,000. Market will watch for the Eurogroup meeting next Monday on Spanish bank aid, and the new loans and M2 growth data from China next Wednesday, as well as China's Q2 GDP growth number next Friday.

Note: SharpsPixley.com is the the online platform for Sharps Pixley Ltd, a physical precious metals trader.

SharpsPixley.com aims to bring you the latest gold news, live gold prices and gold charts and is an online shop for buying gold bars and gold coins.

Buying gold has never been easier or more attractive and is a great investment. SharpsPixley.com will allow those interested in buying precious metals to buy gold against the live spot price of gold, and SharpsPixley.com will keep you informed of all the latest market trends using our gold news feeds, our gold charting tools, and displaying live gold prices from around the world.

This article is republished with permission from Sharps Pixley.

Click here for more information about Sharps Pixley.

© Copyright Sharps Pixley 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

RELATED ARTICLES

Gold rebounds strongly as market scrutinizes for European implementation

Gold up 2% on the week after getting 'shot in the arm' from Europe

Deflationary forces overwhelm gold

Long-term investors diversify into gold while markets ponder next move

The next BIG THING in gold: Possible purchase of 1700 tonnes gold

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

• Top news
• Business News
• Company News