Gold celebrates Karl Marx's birthday with a small rally

Precious metal bulls, encouraged by gold’s strong reaction to Friday’s much better than expected non-farm payrolls report were rewarded again on Monday, with gold prices pushing as high as USD $1317oz, before easing to USD $1310oz where the yellow metal sits currently.

Silver prices also performed well, strongly holding the support line at USD $19oz it was testing late last week and getting as high as USD $19.81oz before pulling back slightly.

Gold prices are now comfortably back above their 200DMA, but would need to hold above USD $1320oz to break the 50DMA and turn the market more clearly bullish short-term.

There was no major reason for the move in gold yesterday per-se, with gold rising during Asia trading hours, although the better than expected US data overnight, where both the Markit Services and ISM Non Manufacturing PMI beat expectations, took a little wind out of sails. T

here was likely some short covering as Fridays rally no doubt discouraged some of the bears, but with ETF holdings still falling (SPDR down to 783 tonnes as per Friday), the market is still on a knife’s edge.

Bigger news yesterday was the Chinese HSBC Manufacturing PMI, which missed expectations and is sitting at 48.1. The Chinese data, alongside a large miss to building permits and another weak AiG Performance of Services Index report in Australia originally put a little pressure on the AUD, though its back around USD 0.9275 now, with AUD gold at 1412oz

Today, the focus will be on the RBA’s interest rate decision, with rates staying at 2.50% a formality. Market watchers will have all eyes on the policy statement to see if the bank hints at an easing bias, especially with confidence weakening, and likely to suffer further if we do get even a hint of the much promised ‘horror budget’.

Oh yes, and re the heading – on this day (well actually May 5th – but that’s the price action and economic data I’m reviewing) in 1818, Karl Marx was born in Trier, Germany.