The gold price has held onto gains made overnight on Wednesday morning but it continues to look vulnerable to a resumption of the downward trend given near-two-year highs in the dollar and strong outflows from gold ETFs.
Spot gold was last at $1,163.00/1,163.80 per ounce, up $2 on Tuesday’s close and trading within a $9 intraday range.
Sentiment has picked up tentatively after the metals became oversold, with the next big resistance level forming at the previous breakout point of $1,180. US data later this week could push prices back towards this level if the numbers fall short of forecasts.
US wholesale inventories are due later today before unemployment claims, Jolts job openings and the Federal budget balance on Thursday and retail sales, import prices, business inventories and UOM preliminary consumer sentiment and inflation expectations on Friday.
“The precious metals rebounded strongly on Friday and consolidated on Monday and early Tuesday. They now look well placed to edge higher again,” FastMarkets analyst William Adams said. If there is enough buying to chase prices higher, fund short-covering could lead to improved momentum. Still, sentiment largely remains negative so volatility is to be expected.”
The dollar was last at 1.2460 against the euro, up 0.15 cents on growing speculation that the ECB – the only major central bank not to have gone done the route of quantitative easing – may introduce fresh easing measures to kick-start the bloc’s stumbling economy.
This brings the German consumer price index on Thursday and above all the German and eurozone GDP numbers on Friday sharply into focus after today’s eurozone industrial production for September was as forecast at 0.6 percent, a solid rebound from -1.4 percent in the previous month.
Outflows from gold-backed exchange-traded funds continue while investors seek better returns elsewhere. Today, holdings in the SPDR fund, the world’s largest gold-backed fund, hit a fresh six-year low, the sixth straight day of outflows, with total holdings now at 724.46 tonnes.
Equities have been performing well in recent sessions, particularly in Asia this morning, with the Nikkei and Hang Seng both currently up at 0.43 and 0.55 percent respectively.
Helping to buoy the markets are reports that Japanese Prime Minister Shinzo Abe may call for an early snap election next month, which raises the likelihood that Tokyo will delay a second increase to the sales tax that was on the slate for next October.
Chinese fixed asset investment, retail sales and industrial production, due for release tomorrow, should provide an indication on the strength of its economy.
In the other metals, silver was three cents lower at $15.63/15.68 per ounce, while platinum at $1,201/1,206 was up $4 and palladium at $772/778 was up $6.
(Editing by Mark Shaw)
The post BULLION MORNING – Gold price holds gains, fund outflows continue appeared first on The Bullion Desk.
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