Gold gained on Monday to its highest in a month after weaker-than-expected US wages data hurt the dollar, while providing support for the precious metal.
Comex gold for delivery in February climbed 0.50% to $1 222.2 per troy ounce by 08:34 GMT, having shifted in a daily range between $1 217.5 and $1 231.3, its highest since December 11. The precious metal gained 0.63% on Friday to $1 216.1.
The labor report released on Friday showed that US employers added 252 000 jobs in December, while the unemployment rate fell to a new multi-year low. However, average hourly earnings scored a record fall since 2006. The information boosted speculations that the Federal Reserve would take its time in initiating a rate hike, which is good news for the non-interest-bearing gold.
The US dollar index for settlement in March was up 0.18% at 92.310 at 08:38 GMT, holding in a daily range of 92.345-91.865. The US currency gauge lost 0.49% on Friday to 92.147. A stronger greenback makes dollar-denominated commodities more expensive for holders of foreign currencies and curbs their appeal as an alternative investment, and vice versa.
Another contributor to the yellow metals rally was the global slump in oil prices, which reached their lowest since April 2009. Normally, plunging oil hurts golds appeal as hedge against an oil-led inflation. However, weakness in the equity markets spurred by the continuously falling oil prices prompted investors to seek protection in gold.
“Gold looks to be supported this week by risk aversion in Europe brought about by Greece, as well as physical demand in Asia before the Lunar New Year,” Huang Wei, an analyst at Huatai Great Wall Futures, wrote in a note, cited by Bloomberg.
Stronger Chinese demand ahead of the Lunar New Year benefited the precious metal. During the holiday, to be celebrated in China on February 19-20th, people exchange gold gifts or buy the metal for good luck. On Monday, the yellow metal was traded $4 to $5 higher than the global benchmark on the Shanghai Gold Exchange, outlining robust demand.
According to a U.S. Commodity Futures Trading Commission report released on Friday, gold traders increased their net-long positions on gold in the week to January 6 in both futures and options.
Concerns caused by the Greek political turmoil also aided golds performance. Greece may be the first country to leave the euro zone, should the Syriza party, which has a small lead over its rivals, win the elections scheduled on January 25. The political group has promised to lift Berlin-imposed austerity policies and significantly reduce the country’s debt.
Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, climbed 2.99 tons to 707.82 tons on Friday, its biggest increase since July. Holding changes typically move gold prices in the same direction.
Pivot Points
According to Binary Tribune’s daily analysis, February gold’s central pivot point on the Comex stands at $1 215.7. If the contract breaks its first resistance level at $1 224.4, next barrier will be at $1 232.7. In case the second key resistance is broken, the precious metal may attempt to advance to $1 241.4.
If the contract manages to breach the S1 level at $1 207.4, it will next see support at $1 198.7. With this second key support broken, movement to the downside may extend to $1 190.4.
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