Gold futures for February delivery settled $6.5 lower to end at $1,409.3 an ounce on the Comex division of the New York Mercantile Exchange on Friday. The April futures posted a weekly gain of $20.7 due to easing oil prices. Before Friday, gold prices had risen for nine straight trading days, the longest rally since August 2010, and refreshed the seven-week record on Thursday.
“Gold is lacking direction as traders are navigating some strong cross-currents,” a US-based fund manager said.
Comex gold has rallied about six per cent this month and climbed within 1.5 per cent of the all-time contract high of $1,432.5 set on December 7.
“We’re going to experience a slight lull and might even see a mild correction before making a run towards the record in the coming days and weeks,” he added.
Gold is likely to face strong resistance at $1,415.25 and get support below $1,390, the market picture chart suggests. Technically, prices are expected to face resistance at $1,434.1 and support below $1,390. The MKTP chart for Friday for the April futures hints at range-bound trading, with strong resistance above $1,415. The weekly trading pattern in April futures hit volume-based upside at $1,437 and TPO-based support at $1,388.40. The gold may not go substantially below $1,400 next week as almost 90 per cent volume last week was above that level.
Call writers expect gold to hover around $1,400 as they sold significant long positions at that level in the last two trading sessions. There was put-writing at the $1,400 strike as participants expect gold to stay above this level in the near future. From a technical perspective, gold remains capped at $1,416.55 on the weekly chart.
“Gold may still have the potential to advance towards the December 7 high, with support coming from growth in investment, geopolictical factors and inflation threats,” Tom Pawlicki, an analyst at MF Global Holdings in Chicago, said in a report.
Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, declined from 1,223.1 to 1,211.6 tonnes as on February 25, according to figures on the company’s website.
