GOLD PRICED in Euros rose sharply on Friday, hitting 20-month highs above €1000 per ounce as Dollar gold also gained following weak US inflation data.
The Euro sank to new 10-year lows vs. the Dollar near $1.15, while commodities rallied but major government bond prices retreated, pulling yields higher.
Germany's Dax stock index recovered earlier losses to hit new all-time highs.
Gold priced in Sterling meantime rose to £840 per ounce, gaining 4.3% for the week to reach 16-month highs.
Dollar gold in London reached $1277 per ounce, some 4.9% up from last week at the highest PM Fix since 1st September last year.
Excluding food and energy prices – and with WTI crude oil down some 20% in December – so-called "core" US consumer prices rose 1.6% annually last month, the
Bureau of Labor Statistics said Friday, the slowest pace since mid-2011.
The all-inclusive headline rate outpaced Wall Street's analysis, but halved from November's pace to just 0.8% per year.
"We can't see the Fed hiking rates when core inflation is not only well below target but moving further in the wrong direction," says a note from US investment bank Morgan Stanley's bond team.
But the same bank's commodities analysts continue to believe "a key weight on gold's price is the market-wide expectation of a June 2015 rate hike in the US."
Morgan Stanley's average 2015 gold price forecast is now $1180 per ounce, it said Friday – down from $1265 last year – with a further drop to $1165 in 2016.
Switching its short-term outlook decisively bullish, in contrast, technical chart analysis from Morgan Stanley's fellow London market-maker Societe Generale now says "Gold confirmed [a] bullish inverted Head and Shoulder pattern."
Gold prices, says SocGen, are now "flirting with the upper limit of the rising channel in force since November and the [down] trend resistance drawn from last April."
"Technicals a big deal," says another London bullion bank's trading desk, "after gold ran through major resistance at $1253" – the October high and 200-day moving average of US Dollar prices.
"Gold all of a sudden a 'safe haven' as the world is a very risky place," it goes on, pointing to market chaos from Thursday's
end to the Swiss Franc's Euro peg, expectations of QE money printing from the European Central Bank next Thursday, and the Greek elections 3 days later – widely expected to bring the Syriza anti-austerity party to power.
The number of call options to buy US gold futures at $1300 per ounce by end-January swelled by 12% on Thursday.
Thursday saw the number of shares in issue for the SPDR Gold Trust (NYSEArca:GLD) swell by 1.4%, the largest addition since August 2011, just as gold prices were hitting their all-time highs.
By weight, that required an additional 10 tonnes of gold to back the SPDR trust's shares, taking its gold holdings to 717 tonnes – the sharpest 1-day rise since August 2012, just before quantitative easing from the US Federal Reserve reached its peak.
