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October 24th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postNo Comments »

Gold fell last week as the U.S. dollar gained for a second day a week prior which was supported by a weak euro while the four-week high prices resulted in limited demand. Silver, palladium and platinum metals likewise fell.

Comex gold for settlement in December went down by 0.87 % to $1223.5 per troy ounce, which ranged between $1 233.3 and $1 222.1 during the said trading day. The precious metal rose for a second day last week and settled 0.35 % higher at $1,234.3 which rose to an intraday high of $1,238 per ounce, its highest since September.

Gold retreated after two days of gains as prices peaked in four weeks deterring purchases while a strong dollar also helped in pushing the prices lower.

The U.S. dollar index which is a gauge of the greenback’s performance against a basket of six counterparts, rose for a second day which bolstered by a weaker euro. Major U.S. economies reported an overall downbeat inflation data, while the Eurozone’s industrial production contracted in August both on monthly and a year-on-year basis. A test of investor confidence for the single currency bloc fell for a tenth month, while both present conditions assessment and economic sentiment in Germany were the worst on record.

The U.S. dollar index for settlement in December traded at 86.030, up 0.10 % on the day. Prices ranged between a daily high of 86.130 and 85.965. The contract settled to 0.25 % higher this week at 85.965.

Although the downbeat data bolstered the U.S. dollar, it also placed a floor under gold as growing economic uncertainties tend to spur safe-haven demand.

The weaker than expected global growth could possibly result in the Fed to remove accommodation slower than otherwise. The central bank will not be raising interest rates until the U.S. economic growth has advanced sufficiently and emerging markets could comprehend the interest rate hike. An extended period of rock-bottom interest rates would benefit gold as non-interest-bearing asset which at the same time will move the dollar down.

It remains to be seen on how the U.S. will be affected by the slowdown in major economies and as a result the Fed will be less than willing to loosen monetary policy. There is an expectations that prices will be volatile as higher U.S. rates will weigh on gold prices whilst worries regarding a global slowdown will bolster haven demand.

Physical demand from the metal’s top purchasers likewise lent some support. India’s gold imports nearly doubled in September to $3.75 billion from a month earlier ahead of the nation’s festival and wedding season.

In China, the leading global consumer in physical gold was trading on the Shanghai Gold Exchange remained very active with premiums hovering at around $4 per troy ounce.
Market players are now eyeing the upcoming date from the U.S. including producer inflation and retail sales to effectively gauge the U.S. economy’s momentum and gain possible hints for the Fed’s interest rate timing which is still undisclosed.

Assets in the SPDR Gold Trust , which is considered the largest bullion-backed ETF and a major gauge of investor sentiment towards the metal, remained unaffected at 761.23 tons last week even after they rose the week prior for the first time since September.

Pivots on a daily basis

Based on recent daily analysis, December gold’s present pivot point presently stands at $1 234.7. If the precious metal breaks its first resistance at $1,238,2 its next barrier will be at the $1 242.1 level. Should the second key resistance is shattered, the precious yellow metal might try to advance to $1,245.6. Gold was able to breach the trade’s S1, S2 and S3 support levels, which primarily stood at $1 230.8, $1 227.3 and $1 223.4 correspondingly.

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