Gold futures for December delivery gained $34.10 or 1.9 per cent on Friday to settle at $1,797.30 on the Comex in New York. However, in after-hours electronic trading, prices jumped as much as 3.7 per cent to $1,832 after Federal Reserve Chairman Ben S Bernanke did not offer further stimulus to the economy. Earlier, gold futures had slumped to $1,705, or 11 per cent, after touching a record $1,917.90 an ounce, but recovered sharply to settle at 1,832 in late trading on Friday.
The weekly market picture chart sourced from Bloomberg hinted at a price level of $2,047 on the upside and lower-end support at $1,650. Rich DeFalco, president, West Cooper Asset Management said he eventually expected gold to rise to $2,100 as its next target, but in the short-term expects it to rest around the $1,700 mark, especially next week as people take the last of their vacations. London will be closed on Monday and on September 5, trading in the US is closed for the labour day holiday.
The December futures saw volume-based selling after reaching an all-time high of $1,917.90 an ounce. The short-covering in December futures comes around $1,705 — 50 per cent retracement level from the recent high from a low of $1,580. The December futures saw significant buy-side volume around $1,780 and, hence, gold expected to move up further on Monday. The market picture chart (MKTP) showed upside resistance at $1,871 and strong support below $1,737. The volume in call and put options for the November delivery remained at low ebb indicating lack of interest in options trading.
Gold is in the 11th year of a bull market, the longest winning streak since 1920 in London, as investors sought to diversify away from equities and some currencies. Traders are buying gold to hedge against financial turmoil in case European Central Bank President Jean-Claude Trichet signals a policy change in Europe at Jackson Hole over the weekend, said Adam Klopfenstein, a strategist at MF Global in Chicago.
The outlook for gold prices is a bit hazy next week as the market is reeling from a significant drop from all-time highs this week, so the market may try to stabilise and consolidate. In the Kitco News Gold Survey, of the 23 participants as many as 10 responded said gold prices would go up and six said prices will go down, while seven expected prices sideways or unchanged.
