Gold fell in quiet trade on Thursday as assets in the top bullion exchange-traded fund fell to a new six-year low and investors awaited the results from the Swiss referendum on Sunday.
Comex gold for delivery in February fell by $2.8 to $1 194.7 per troy ounce by 10:30 GMT, having shifted in a daily range of $1 199.3-$1 185.2 an ounce, the lowest since November 20th. The precious metal dropped 0.03% on Wednesday to $1 197.5.
“Gold is stuck on either side of $1,200 with a break of $1 190 or $1 205 needed for the next leg in either direction,” said Jason Cerisola, metals dealer at MKS Group.
Investors are waiting for the results of Sundays referendum in Switzerland, where voters will decide whether the Swiss National Bank will be forced to keep its gold reserves and even increase them from 8% to 20% of total assets.
If there is a positive outcome of the vote, the bank will have to purchase around 1 500 tons of gold over the next few years. Such large transactions will ultimately increase bullion prices, analysts have said.
However, a recent opinion poll showed that support for the new gold policy fell to 38% in November, compared to the 44% of all votes in October. The recent data also displayed a 15% portion of undecided votes.
“The Swiss vote should be monitored even though the probability of ‘yes’ is low. When this supportive factor is removed, precious metals will be pressured lower” Mark To, head of research at Wing Fung Financial Group, said for Bloomberg.
The US dollar index climbed 0.26% by 10:14 GMT on Thursday to 87.875 and remained in proximity to a recent 4-1/2-year high. The December contract closed 0.36% lower at 87.649 yesterday, having ranged between 88.105 and 87.560 during the day.
Landing support for the precious metal, the US Labor Department reported yesterday that initial jobless claims rose to 313 000 in the week ended November 22nd, the highest since early September. Separate data showed that pending home sales unexpectedly contracted in October, while the annualized growth pace of new home sales came in below expectations.
A better-than-projected durable goods orders report for October fanned positive sentiment but the Thomson Reuters/University of Michigan Consumer Sentiment Index unexpectedly slid in November, confirming a drop in consumer confidence reported by the Conference Board on Tuesday.
After four days of unchanged assets in the SPDR Gold Trust, holdings fell by 2.09 tons to 718.82 tons, the lowest since September 2008.
Pivot Points
According to Binary Tribune’s daily analysis, February gold’s central pivot point on the Comex stands $1 197.9. If the contract breaks its first resistance level at $1 201.2, next barrier will be at $1 204.9. In case the second key resistance is broken, the precious metal may attempt to advance to $1 208.2.
If the contract manages to breach the S1 level at $1 194.2, it will next see support at $1 190.9. With this second key support broken, movement to the downside may extend to $1 187.2.
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