Gold futures for December delivery rose $12.70 on Friday to settle at $1,183.90 an ounce from the day’s low of $1167.98 as worse-than-expected US second quarter GDP data revived demand for safe-haven assets. The most active gold contract for December delivery moved in a wider range, hitting a low of $1,169.98 in early trade, and bounced back to the day’s high of $1,184.50 on short-covering.
Market picture data show short-covering above $1,175. The participants bought the 1,200-strike call options of the December series, paying a $7.50 premium on expectation of the price moving above $1,200. The 1,190-strike put options of the series saw strong selling, indicating support.
The time-price opportunity support for gold is expected at $1,156 while volume-based support is at $1,162. Gold is likely to get strong technical support at $1,150 and 21 days moving average resistance at $1,200. The lower-than-expected data confirmed investors’ speculation that the US economic recovery had lost momentum. This sparked a return of demand for safe-haven assets, which offered solid support to gold on Friday.
“Gold is beginning to catch some traction,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. “The correction may have run its course and for long-term holders, this may be a buying opportunity.”
The five per cent price drop in July is the first monthly decline since March, and gold has fallen 6.5 per cent from its June 21 record of $1,266.50 an ounce.
Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, declined 1.5 per cent this week, heading for the biggest weekly drop since April 2009.
Hedge-fund managers and other large speculators increased their net-long position in New York gold futures in the week ended July 27, according to US Commodity Futures Trading Commission data.
