Gold futures fell in New York, the biggest weekly loss in six months, on expectations that a recovering US economy will erode demand for the metal as a safe haven. Gold futures for February delivery fell $52.50, or 3.75 per cent, to settle at $1,368.90 an ounce on the Comex in New York.
The gold futures fluctuated widely, touching a weekly high of $1,424.40 on Monday and slipping to a low of $1,352.70, on expectation of recovery in the US economy. The gold, however, closed higher at $1,368.90 after the dollar pared earlier gains following a report that the US added fewer jobs in December than the economists had forecast. Gold advanced 30 per cent in 2010 and rose to a record last month on concern that the global recovery would falter.
The rally in precious metals is likely to move in a narrow band next week with a time-price opportunities-based target of $1,397, the Bloomberg’s market picture chart suggests. Strong support is expected around $1,350, based on significant put writing in the $1,350-strike put options. The 21 days moving average indicates an upside of $1,390 and support at $1,350. The traders sold the $1,400-strike call options on expectation of strong resistance above that level.
“As the economy continues to improve, the downward pressure will mount,” said Matthew Zeman, a metal trader at LaSalle Futures Group in Chicago. “There’s less need for a safe-haven asset.” Hedge-fund managers and other large speculators decreased their net-long positions in New York gold futures in the week ended January 4, according to US Commodity Futures Trading Commission data. Net-long positions fell by 13,470 contracts, or 6 per cent, from a week earlier.
Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, decreased 9.56 metric tonnes to 1,271.16 metric tonnes on January 7, according to figures on the company’s website. Gold holdings in the iShares Comex Gold Trust decreased 2,723 ounces last week, indicating profit-booking.
