Gold began consolidating in London trading early this morning, as profits from yesterday’s rally were booked. Crude oil is slightly lower today for the same reason, while the dollar is higher on weakness in the European markets. European banks may also be moving back into the dollar after boosting Euro holdings for year-end accounting purposes.
Stocks in New York opened lower, on news that employment grew more than expected in December, mainly in construction and transportation as a result of rebuilding efforts related to hurricane Sandy, but jobless claims also rose more than expected, which could have been spurred by seasonal help being let go after Christmas. Although manufacturing lost more jobs last month, Ford and Chrysler both reported better than expected sales figures today.
Analysts expected the bloom to fall from the post- fiscal cliff rally today as the market realizes that the real battle in Congress has only been postponed until February. This isn’t necessarily bad news for gold, though. TD Securities notes “The ominous debt ceiling debate and the fiscal drag stemming from higher payroll taxes and higher income taxes will further support an easy Fed policy, which is supportive for gold.”