Gold futures for December delivery rose to a record $1,637.50 an ounce on Friday, as demand rose for the safe investment haven, amid mounting concerns on the US debt impasse and signs of a faltering economy. The December contract settled at $1,631.20 on the Comex division of the New York Mercantile Exchange, up 1.7 per cent on the week. The metal, up 8.5 per cent in July, had four straight weekly advances.
The outcome of the debt-ceiling talks will give gold its direction next week, and the bias is down for the short-term. In the Kitco News Gold Survey, out of the 34 participants, 24 responded this week. Of those 24, eight saw a rise in prices, while prices fell for 10 others, five remained neutral and one saw prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts.
Market watchers are less optimistic and analysts are short-term bearish – at least for the next few weeks. Gold was in its cyclically weaker time frame, particularly as the market heads to August. Next week, resistance is expected above $1,660 and strong support around $1,595. Floor traders expect the December futures to consolidate around $1,617-1,620. The market picture chart hints at resistance above $1,631.
The December futures saw volume-based selling on Friday, above the day’s closing, and, hence, gold is expected to face strong resistance above that level. The options traders were inactive, and not willing to buy or sell the $1,600-strike call options of the December delivery, which were quoted at a premium of $75. This indicates that gold may see some selling pressure at a higher level.
Phil Streible, senior market strategist, Lind-Waldock, said the price range next week will depend on what type of deal and a longer-term deal, will be bearish for gold. He said $1,600 has acted as firm support, and the next level of support is at $1,580. If gold closes under $1,580 any time next week, it could fall to $1,550.