The spot rate gold price has dipped back to $1,122.10 per ounce thanks to the continuing resurgence of the dollar. The dollar has improved slowly but steadily in recent weeks as it becomes more likely the Fed will raise interest rates sometime in the next several months.

Sterling continues to be buoyed, especially against the Euro making new 4 month highs, after CPI data came in well above expectations at 2.9%. It now seems pretty much certain that the governor of the Bank of England, Mervyn King, will have to write to the Chancellor next month, especially with the re-imposition of the VAT rate, to explain why CPI rose more by than 1 % above its target level in January. It also means that there is little chance of further quantitative easing.

As the dollar has rebounded from some recently disappointing jobs news, it has pushed back against recent gains in oil prices and gold prices. A barrel of oil fell below $79 in Friday (January 15) morning trade on the New York Mercantile Exchange.

Exchange rates have not been favorable for the US dollar in the early part of the week as the greenback has been hit again following disappointing news of late on the job and housing sector fronts.

As we mentioned early on Friday in our post before the NFP data, the Euro and Pound were holding critical support areas. After a release of data that fell way below expectations on payrolls it seems it’s time to punish the US Dollar once again.

Just when it appeared that the gold price was ready to reverse its long-running and fast-paced upward trend, speculators have begun to jump back in. After falling to a 60-day low of $1,080.50, the price of gold reached its highest point in just over a month at the close of New York trade on January 6th.