The gold price again handed back more of Friday’s gains on Tuesday, as the dollar moved near a re-test of last week’s near-two year highs against the euro and heavy liquidation continued in the face of an uneasy near-term outlook.
Spot gold was last seen at $1,151.20/1,152.00, down $3.60, although a low of $1,146.000 was hit earlier in the day following on from the 1.9 percent drop in the previous session, with the dollar at 1.2398 against the euro – last Friday it peaked at 1.2357.
Gold’s attractiveness as an investment against the dollar continues to diminish, as investors routed from the metal into more profitable ventures, particularly equities. Yesterday, the Dow and S&P 500 both closed at record highs, with the Dow industrial average up 0.23 percent and the S&P up 0.31 percent.
Asia has followed on from the highs – the Nikkei was last up 2.05 percent while the Hong Kong Hang Seng was also up at 0.27 percent.
“Precious metals prices seem to be pulling back to see how strong underlying buying is, if there is still good buying to be found then the market might feel more confident that a base might be in place. That said, given Friday’s rebound just fell shy of the breakdown level at $1,180 level, it may well mean that the rebound was also just a test of the break down level where overhead selling was still evident,” FastMarkets analyst William Adams said.
“As such, if there is good underlying buying in the days ahead then it looks likely prices will consolidate until there are other developments in the market. Once rallies do get underway and are sustainable then we would be wary of the potential for short-covering given the size of the gross short positions on Comex gold and silver.”
Today, the US is on holiday to observe their Veterans Day public holiday, so the economic calendar remains subdued and unlikely to add any volatility to the gold market.
In data already today, the Japanese consumer confidence figures disappointed at 38.9 as did the Economy watchers sentiment release, while preliminary machine tool orders came in at forecast.
Still to come this week, new loans, M2 money supply, industrial production, retails sales and fixed asset investment numbers from China will be closely watched for the latest indication of the strength of the economy.
Silver had rebound 85 cents from Friday’s low, but prices have struggled to hold on to gains and are now back to $15.56/15.61, down six cents on Monday’s close.
“This pull-back may be a test to see if underlying support is still there, or it could be a continuation of the dominant downtrend. The chances are the latter, on the basis that ‘the trend is your friend’, Adams added. “But if $15.06 holds and another rebound follows then we need to be wary of the possibility of a short-covering rally – the funds’ positions on Comex are extremely polarised with a large number of longs and shorts. “
In PGMs, palladium was last unchanged at $760/766, as was platinum, last seen at $1,197/1,202 per ounce.
(Editing by Martin Hayes)
The post Gold price unsteady again, dollar homes in on near 2-yr highs appeared first on The Bullion Desk.
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