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Gold trading outlook: futures struggle as global demand falters, SPDR assets extend drop

Gold swung between gains and losses, pressured below a key resistance at $1 180, as a report showed global bullion demand fell to the lowest in five years in the third quarter, while the US dollar held strong ahead of todays jobless data.

December gold traded 0.03% lower at $1 158.7 per troy ounce at 9:54 GMT, having shifted in a daily range of $1 167.4 and $1 153.0 an ounce. The precious metal slid 0.34% on Wednesday to $1 159.1. Prices fell to $1 130.4 on November 7th, the lowest since April 2010.

The London-based World Gold Council reported today that global gold demand fell by an annualized 2.5% in the third quarter to 929.3 tons, hitting the lowest level since the last quarter of 2009. Jewelry consumption dipped 4%, while net investment demand rose by 6% to 204.4 tons, but technology demand slid to 97.9 tons. In the investment category, bar and coin demand fell by 21.4% to 245.6 tons.

The drop was led by an annualized 37% decline in Chinese demand to 182.7 metric tons in the quarter ended September, while India purchased 225.1 tons, up 39.3% from 161.6 tons a year earlier. However, most of the other major consumers saw their demand decline, including Switzerland, Turkey, the Middle East as a whole, while Indonesia posted a 45% decline. The industry group also lowered its forecast for Chinas annual demand for a second time in three months.

The precious metal fell last Friday to the lowest in more than four years as the US dollar rallied, boosted by a positive US economic outlook and as foreign central banks introduce stimulus measures, while the Fed is committed to raise interest rates at some point in 2015.

“I think the market will consolidate at this level, we could go up a bit but not far,” said a trader in Shanghai fro CNBC. “The support at $1 180 has become a key resistance level.”

Market players eyed todays initial jobless claims data for possible cues after last weeks non-farm payrolls came in lower than expected, albeit firmly above 200 000, while the unemployment rate slid to the lowest in six years.

The Labor Department is expected to report today that Initial Jobless Claims in the week ended November 8th rose to 282 000 from 278 000 during the previous week, but continuing jobless claims likely fell further to a new multi-year low of 2.320 million. The four-week average of jobless claims fell to 279 000 last week, the lowest since 2000.

The US dollar index stood at 87.790 at 9:54 GMT, down 0.13% on the day. On Wednesday the US currency gauge added 0.21% and closed at 87.906, having risen to 88.315 on Friday, the highest since June 2010.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETP and a gauge of investor sentiment toward gold, fell to 722.67 tons on Wednesday, the lowest since September 2008. Holdings have fallen for seven straight days, the longest losing stretch since June 2013.

Pivot points

According to Binary Tribune’s daily analysis, December gold’s central pivot point on the Comex stands $1 161.7. If the contract breaks its first resistance level at $1 166.8, next barrier will be at $1 174.6. In case the second key resistance is broken, the precious metal may attempt to advance to $1 179.7.

If the contract manages to breach the S1 level at $1 153.9, it will next see support at $1 148.8. With this second key support broken, movement to the downside may extend to $1 141.0.

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