Gold was rallying through whole January, but hit resistance in February. The precious metal was trading sideways for several sessions, moving in a range of about $1,713 to 1,760 per ounce. Development of the situation in Europe will likely be crucial for performance of the metal in a short term. For now, Europe looks a little better than was though previously, but the perception of the situation in the eurozone may change anytime.

Gold spot price climbed from $1,731.40 to $1,746.80, but retreated and traded near $1,732.70 as of 23:42 GMT today on COMEX.

US nonfarm payrolls rose by 243,000 jobs in January. That’s compared to the average forecast of 150,000 and the December growth by 203,000. The unemployment rate fell to 8.3 percent, making a pleasant surprise for market participants, who expected it to stay at 8.5 percent.

Carsten Fritsch, analyst at Commerzbank, spoke about the positive impact of the news, but also mentioned a negative side of the employment growth regarding commodity prices:

The jobs data shows the economy is gaining momentum. This is bullish for risk appetite and therefore for commodity prices. However, it may limit the scope for a third round of quantitative easing, and this may limit gains.

March futures for delivery of crude oil gained $1.11 to $97.47 per barrel before trading at $96.89 by 13:42 on NYMEX. Spot price for Brent crude went up from $112.50 to $113.34 per barrel as of 17:41 GMT today on ICE. Gold dropped from $1,758.70 to $1,736.70 on COMEX today.
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Bernanke explained how external influences, like the earthquake in Japan and Europe’s crisis, hurt the US economy in 2011, but added:

Fortunately, over the past few months, indicators of spending, production, and job market activity have shown some signs of improvement; and, in economic projections just released, Federal Open Market Committee (FOMC) participants indicated that they expect somewhat stronger growth this year than in 2011.

Positive performance of the US economy isn’t guaranteed, though, as Chairman explained:

The outlook remains uncertain, however, and close monitoring of economic developments will remain necessary.

Such comments leave place for additional stimulus that may be beneficial for gold prices.

The economic situation in the United States is balance in a unique way as both improvement and deteriorating of the economy may prove positive for the precious metal. Prices for gold reflected that by climbing by 11 percent in January.

Gold traded at $1,756.70 as of 4:23 GMT today on COMEX after jumping from $1,745.10 to $1,759.50 yesterday.
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Wheat was also higher on dwindling Russian stocks. Inventories of some Russian regions declined by more than 50 percent, while other regions shipped almost all of their supplies as exports picked up. Wheat climbed from $6.4075 to $6.4650 per bushel on CBoT today.
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The short answer is “yes”. The long answer: most market analysts name a several reasons to be optimistic about gold, but they remain more cautious than at the beginning of the last year. They name several reasons to be bullish on gold: attempts of developed nations to devaluate their currencies and physical demand from Asia. The United States is perhaps the major contributor to optimism for the precious metal as its low interest rates and a possible next round of quantitative easing add to inflationary pressure to the upside for gold. Central banks across the world also stepped in, boosting their gold reserves to diversify from the US currency.

What about downside factors for gold? There is one most important threat for the commodity: Europe. It may look strange at first as the European debt crisis should add to safe-haven attractiveness of gold, but one needs just to recall 2008, when all commodities were tumbling, even precious metals. A serious crisis can be negative for gold and the problems of Europe look serious enough.

Mark Leibovit, editor of the VRTrader newsletter, said in December:

We might hit bottom in a month or so. How far it might go depends on how the technicals unfold. Short-term it’s held the September lows of $1,531. But we have to see it perform in both time and price to confirm it. What might it take do so? We’d need to see the equity market improve, Europe improve, and maybe a QE3.

That outlines the major factors for gold. In case the Federal Reserve would embark on a new round of easing and Europe would emerge from its crisis relatively unscathed, the precious metal will jump to new records. Consequently, gold is in danger in scenario where the USA would recover without additional stimulus, while the eurozone woes would strengthen. If anything, such scenario would boost the dollar, hitting prices for all commodities, gold included. Unfortunately for gold bulls, such scenario is quite possible as America shows signs of recovery, reducing need for stimulus, while European politicians lack courage to make bold moves for saving the European Union from its credit crunch.

Most analysts remain optimistic for gold, though less bold in promising new records. They believe that the metal will reach $2,000 per ounce in 2012, but it won’t move in a straight line and strong corrections can be expected. The worst case scenario may push gold to $1,270, but it’s not likely to go lower, at least not in 2012. In fact, forecasters thought that gold would be weak at the beginning of this year, but for now the precious metal proves to be more resilient than it was given credit for.
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Demand for German bonds on the auction yesterday was weak. Eurozone inflation fell from 3.0 percent to 2.8 percent last month, according to the preliminary estimate of Eurostat.

Earlier, crude was rising on growing tensions around Iran. Oil and copper were also rallying as manufacturing in the United States and China expanded.

February futures for delivery of crude was down $0.71 to $102.25 per barrel as of 00:43 GMT in electronic trading on NYMEX. Brent crude dropped from $113.65 to $113.05 per barrel as of 3:43 GMT today on ICE. Copper was down from $3.4700 to $3.4230 per pound, while gold went higher from $1,614.20 to $1,617.20 per ounce today on COMEX.
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Both commodities also gained on rumors that Iran made headway in creating nuclear weapon. Gold rallied as the rumors increased its appeal as a safe asset, while oil rose on concerns that sanctions against the country from the USA would disrupt shipments.

February futures for crude oil delivery advanced as much as $4.13 to $102.96 per barrel on NYMEX, the highest price since May 10. Brent crude surged from $108.38 to $112.07 per barrel today as of 23:18 GMT on ICE. Gold was up from $1,570.10 to $1,606.70 per ounce, while silver spot price went higher from $28.17 to $29.55 per ounce on COMEX.
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The US gross domestic product expanded 1.8 percent in the third quarter. The jobless claims went down from 368,000 to 364,000 last week. The University of Michigan consumer sentiment index rose from 64.1 to 69.9 in December. The leading index advanced 0.5 percent in November.

Oil also gained as the report showed that the US inventories shrank by 10.6 million barrels to 323.6 million barrels last week.

February futures for gained as much as $1.14 to $99.81 per barrel by 12:19 on NYMEX. Brent crude oil advanced from $107.92 to $108.21 per barrel today as of 17:48 GMT on ICE, following the earlier drop to $107.29. Gold retreated from $1,608.80 to $1,604.00 on COMEX.
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The European Union pledged €150 billion to the International Monetary Fund that the IMF will use to help in the battle with the region’s sovereign-debt crisis. The German Business Climate index unexpectedly increased to 107.2 in December from 106.6 in November, while analysts predicted it to drop to 106.2. Spain sold its three- and six-month bills at an auction yesterday, exceeding its maximum target.

The US housing starts increased from 627,000 to 685,000 and the building permits rose from 644,000 to 681,000 in November.

February futures for crude oil delivery advanced $3.19 to $97.24 per barrel on NYMEX. Brent oil was at $107.15 per barrel today as of 3:11 GMT on ICE after jumping from $104.30 to $107.00 yesterday. Gold advanced from $1,615.50 to $1,620.20 per ounce today on COMEX, following yesterday’s rise from $1,596.40 to $1,615.00. Copper traded near its opening level of $3.3720 per pound today, while the metal climbed from $3.3230 to $3.3640 yesterday.
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The dollar was still weaker yesterday as the fundamental reports from the United States were good for the most part and gold attempted to profit from that. Alas, without much success. The good fundamentals are a mixed blessing for the yellow metal. Good macroeconomic data results in less demand for a safe haven, leading to a weaker dollar, but also less need for gold as a refuge.

Gold opened at $1,571.50 per ounce, rallied to $1,592.80 and closed at $1,573.40 on COMEX.
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But in the absence of policy initiatives in the near future that stabilise credit market conditions effectively, Moody’s believes that the system remains prone to further shocks, which would likely lead to selective rating changes. As a result, Moody’s intention remains to revisit sovereign ratings of euro area and EU countries during the first quarter of 2012.

The Standard & Poor’s GSCI index of 24 commodities fell as much as 1.3 percent to close at 638.93 after earlier it reached 636.8, the lowest level since November 25.

Gold slumped from $1,707.50 to $1,663.90 per ounce on COMEX yesterday and traded today at $1,654.70. Silver slipped from $31.76 to $31.25 on the previous trading session. Copper was down from $3.5045 to $3.4460 per pound and traded today near $3.4435. Brent crude rose from $107.23 to $107.50 per barrel today on ICE after yesterday’s drop from $108.75 to $107.11 per barrel.
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It’s not surprising to see commodities like oil and copper among the losers, but gold again unpleasantly surprised gold bulls. Analysts again named fears of deflation as a reason for the bearishness of gold. The previous high prices of the precious metal were caused by the expectation that central banks would start printing money, inflating the financial system. The ECB still refuses to do so and it doesn’t look like the US Federal Reserve is going to announce a quantitative easing anytime soon. That was a great disappointment for gold.

Brent crude oil traded at $108.07 per barrel today as of 2:00 GMT on ICE, following yesterday’s slump from $109.60 to $107.55 per barrel. Gold was near $1,711.90 per ounce on COMEX today after on the previous trading session it dropped from $1,742.0 to $1,707.90 per ounce. Copper slid from $3.5500 to $3.4755 per pound yesterday.
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