Gold futures for December delivery fell $13.20 an ounce last week to close at $1,352.30 on Comex in New York as moves by China to fight inflation and slow growth eroded demand for precious metals and raw materials. China is the biggest bullion consumer after India.
Gold has dropped 5.1 per cent from a record $1,424.30 an ounce on November 9. “Higher reserve requirements and the expectation of higher rates to cool economy means less demand for gold and other commodities,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago.
The market picture for the last five trading sessions hints at a price level of $1,380 for December futures on the basis of volume. Support on the basis of time-priced opportunities (TPOs) is seen at $1,313. The trading volume and TPOs for the Friday session indicate a volume-based price surge to around $1,364 and TPOs based resistance around $1,366 next week.
The December futures saw significant buying below $1,348 and profit-booking from liquidity providers above $1,353. There was change of hands in the 1,400-1,425-strike call options on expectation of resistance above $1,380. The $1,400-strike puts of December delivery saw insignificant trading on expectations of a range-bound trade in the near future.
The 21-day moving average data indicate resistance above $1,388 and strong support at $1,329. On the Multi Commodity Exchange, gold futures for December delivery are expected to move up to around Rs 20,300 per 10 grams, with support at Rs 19,785.
Dollar strength weighed on precious metals and kept prices under $1,400 the entire week. “That doesn’t mean this market is bearish, not at all, this market is still extremely bullish. We’re in a correction with extreme volatility,” said Scott Meyers, New York branch manager with the Pioneer Futures division of MF Global.
The fact that December gold was able to scratch out a close over $1,350 was a positive sign going into next week, said Bob Haberkorn, senior market strategist, Lind-Waldock, and gold could try to go back and retest the $1,400 area. Haberkorn said he noticed that buyers at Comex were placing bullish bets in the options market, purchasing far out-of-the-money calls, such as July silver $40 calls and $1,600 February gold calls.
