By FXEmpire.com

Analysis and Recommendations:

Gold fell by 17.05 trading at 1636.95. The European Central Bank on Thursday left its main refi rate unchanged at 1%, as expected. Bank President Mario Draghi said the economic outlook remains subject to downside risks, tied in part to ongoing tensions in some sovereign debt markets. Draghi said the ECB will be on the lookout for signs. Draghi said there was “no contradiction” between euro-zone countries adopting a “growth compact” alongside a “fiscal compact.”

Gold drifted downward the most in a week after three voting members of the Federal Open Market Committee said they don’t see a need for more economic stimulus and as physical demand slumped in India, the world’s biggest importer.

Capital spending by the largest gold producers is increasing at a faster pace than earnings for a second straight year as the industry’s biggest mining projects are beset by delays and surging labor costs. Barrick Gold Corp. (ABX) said yesterday it’s reviewing cost estimates for its $5 billion Pascua-Lama gold and silver project on the Chile-Argentina border because of wage and raw materials inflation. Newmont Mining Corp. (NEM) may have to raise the $4.8 billion budget for its Conga mine in Chile after political opposition.

Economic Events for May 3, 2012 actual v. forecast

GBP

Nationwide HPI (MoM)

-0.2%

0.5%

-1.0%

TRY

Turkish CPI (MoM)

1.52%

1.18%

0.41%

GBP

Services PMI

53.3

54.6

55.3

EUR

Interest Rate Decision

1.00%

1.00%

1.00%

USD

Nonfarm Productivity (QoQ)

-0.5%

-0.5%

1.2%

USD

Initial Jobless Claims

365K

380K

392K

USD

Unit Labor Costs (QoQ)

2.0%

2.8%

2.7%

USD

Continuing Jobless Claims

3276K

3311K

3329K

Economic Events for May 4, 2012 for the European and US Markets

08:15 CHF Retail Sales 1.2% 0.8%

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.

10:00 EUR Retail Sales 0.3% -0.1%

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.

13:30 USD Nonfarm Payrolls 170K 120K

Nonfarm Payrolls measures the change in the number of people employed during the previous month, excluding the farming industry. Job creation is the foremost indicator of consumer spending, which accounts for the majority of economic activity.

13:30 USD Unemployment Rate 8.2% 8.2%

The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month.

Just a heads up since gold is volatile and will react to most economic indicators we will begin to post the daily calendar with events that could affect the price of gold. The gold price is sensitive to a number of scheduled U.S. and Euro area macroeconomic announcements–including retail sales, non-farm payrolls, and inflation. Gold’s high sensitivity to real interest rates and its unique role as a safe-haven and store of value typically leads to a counter-cyclical reaction to surprise news, in contrast to their commodities. It also shows a particularly high sensitivity to negative surprises that might lead financial investors to become more risk averse.

These results have a number of implications. To reduce the uncertainty of the return on gold transactions, traders may wish to time their orders flow so as to avoid the release of information that has been shown to affect prices. For longer-term market participants, these results provide confirmation of the pro-cyclical bias of many commodities and gold’s role as a safe-haven during periods of economic uncertainty.

Click here a current Gold Chart.

Originally posted here