Gold gained further ground toward resistance around $1,230 on Monday afternoon, with signs of dollar weakness providing scope to build on recent advances.
Spot gold was last at $1,226.40/1,227.20 per ounce, up $4 after hitting a December 11 high at $1,231.30 earlier.
But the breakout above $1,230 appeared to lose steam – resistance around the level has capped any further gains.
“The metal may have become overbought and require a period of consolidation,” FastMarkets analyst Tom Moore said.
The dollar retreated further from nine-year highs against the euro and was last around 1.1850, with bullion investors generally believing that the prospect of a near-term US rate rise appears less likely given concerns about wages highlighted in Friday’s jobs report.
This allowed gold to reach its session and one-month high and continued to highlight the growing momentum in January, alongside punchy physical demand out of Asia ahead of the lunar New Year.
Premiums on the Shanghai Gold Exchange were up as high as $4, according to a report from MKS this morning.
“I’m always reluctant to get overly friendly to the market when it is near its highs, but its resilience is impressive so far this year and one has to respect that,” David Govett of Marex Spectron said. “If the situation continues as is, we would look for a range now of $1,220 to $1,250 and look to buy dips from here.”
“I really don’t think we are in for a big bull run, but it seems churlish to stand in the way of a market that does not want to go down for the moment. Once the market has got itself overly long, which it may well do, beware of a correction,” he added.
Oil prices continued their steep decline although losses now look to be priced in. Brent fell to around $47 a barrel another five-and-a-half-year low, with WTI dropping to around $45.
There were no market-moving announcements today bar the US labour market conditions index at 6.1, up from the previous, upwardly revised reading of 5.5.
In the other metals, silver was last unchanged at $16.45/16.50 per ounce, while palladium at $804/809 was up $7 as was platinum at $1,231/1,236 following strong vehicle sales data out of China.
(Editing by Mark Shaw)
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