Gold futures were little changed during early trade in Europe today. The most-traded contract is testing a key $1 250 price support, which if broken will ease gold into sliding further down, amid growing pressure from a stronger dollar.
Gold futures for December delivery on the Comex in New York traded at $1 255.1 per troy ounce, up 0.06%, at 8:06 GMT. Prices ranged from $1 254.4 to $1 258.9 per troy ounce. The contract dropped 1.03% on Monday, reaching a three-month low at $1 252.1.
Silver for December delivery stood for a 0.09% daily gain at $18.978 per troy ounce, while palladium was down 0.59% at $880.90. October platinum was down 0.15% at $1 395.35.
“Short-term traders seeking yields are looking for other alternatives” to gold, Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said for Bloomberg. “People who have gold are moving out of gold and they have been for some time. It’s a trade that nobody wants.”
The 15 month-high dollar has weighed heavily in investors sentiment in regards to gold, as speculation grew that the US Federal Reserve will conduct a rate hike earlier than expected. A disappointing payrolls report on Friday revealed the US economy had added just 143 000 new jobs last month, far below the expected 225 000, underlining Fed Chair Janet Yellens cautious approach to a rate hike.
Yet, the dollar continues strengthening, and it puts ever growing pressure on the precious metal.
Since gold is denominated in dollars, a stronger greenback increases the cost of the metal to other currencies, lowering its investment appeal.
“The stronger dollar and weak US inflation are keeping investors on the sidelines” of gold, James Cordier, a principal at Liberty Trading Group, said for The Wall Street Journal. “The landscape for gold is not bullish at all.”
Meanwhile, geopolitical tensions around the globe failed to offer meaningful support for the haven metal.
Ukraine
The conflict in Ukraine was in the heart of significant support for gold earlier this year, but by now investors have grown resilient towards speculation that the tensions between Russia, the world’s top energy producer and exporter, and the West will lead to globally negative economic ramifications, pressuring the safe-haven metal lower.
Even the adoption of further economic sanctions targeted at leading Russian oil companies failed to bump up risk-off bids.
The EU said the new measures were agreed upon, but would come into effect “some days into the future” signaling that the real application of the new sanctions depends on Moscow’s stance in Ukraine’s peace process.
Technical support and resistance levels
According to Binary Tribune’s daily analysis, December gold’s central pivot point on the COMEX stands at $1 259.7. In case futures manage to breach the first resistance level at $1 267.2, the contract will probably continue up to test $1 280.2. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 287.7.
If the contract manages to breach the first key support at $1 246.7, it will probably continue to slide and test $1 239.2. With this second key support broken, the movement to the downside may extend to $1 226.2.
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