The price of gold for December delivery closed in a Doji pattern last week on lack of buying support at higher levels. The indecisiveness is likely to continue next week on account of better-than-expected US economic data. Gold fell from an intraday high of $1264.70 an ounce to below $1,248 on improved US labour market and international trade data. We had indicated a listless trading in gold futures in our weekly outlook last Sunday.
Gold prices fell on Thursday, settling near one-week lows after the biggest daily percentage loss in six weeks, as some investors unwound safe-haven trades and automatic sell orders were set off when prices slid past $1,250 an ounce.
The slide began after the market looked ready to climb near June’s record high at $1,264.90 an ounce. US December gold futures slipped $6.60 to close at $1,250.90 an ounce. It tumbled to a low of $1,243.50 — a level last seen on September 3.
The trading volume in gold for December delivery on the Comex in New York on Friday hints at a fresh correction around the $1,242-mark early next week. The December futures is expected to face resistance above $ 1,256, based on price projections using time-price opportunity (TPO). On a weekly chart, gold is on a strong wicket with a price target of $1,275.75, based on TPOs.
On the Multi Commodity Exchange, gold futures for October delivery is expected to face strong resistance above Rs 19,160. Strong support is seen at Rs 18,779.
However, on a weekly chart, gold October futures is poised for a fresh rally around Rs 19,450 next week. Twenty of 25 traders, investors and analysts surveyed by Bloomberg – or 80 per cent – said the metal will gain next week as concern that the world economic recovery is stalling spurs demand for bullion to protect wealth.
According to the most recent data from the Commodity Futures Trading Commission, speculative long positions in gold futures rose eight per cent last week. Ashraf Laidi, chief foreign currency strategist at CMC Markets, noted: “The case for metals remains not that of outright inflation but that of central banks’ prolonged liquidity drives. Currencies will gain/fall versus one another, but fresh asset purchases will maintain gold and silver ahead.” Laidi forecasts the gold price will reach $1,330 an ounce by the fourth quarter of this year.