Gold trading outlook: futures remain below twelve-week high

Gold fell on Thursday to trade below its highest level in twelve weeks as traders remained cautious amid plunging commodities prices and concerns of sluggish global growth.

Comex gold for delivery in February dropped 0.53% to $1 228.0 per troy ounce by 08:26 GMT, shifting in a daily range of $1 232.5 – $1 226.1. The precious metal settled almost unchanged on Wednesday at $1 234.5, having earlier risen to $1 244.6, the highest since October 23.

Asian stocks gained some momentum and managed to recover losses from the previous session. However, investors concerns about slowing global growth were refueled by weaker US economic data combined with plunging copper prices, which traded at their lowest level in five and a half years.

“Gold has now tested $1,245 three times and failed on each occasion. We believe gold could test $1,215-20 in the coming days,” said Jason Cerisola, a metals dealer at MKS Group, cited by CNBC.

Investors also weighted the possibility that the Federal Reserve may not initiate an increase in borrowing costs sooner rather than later amid speculations that weak oil and copper prices may pressure inflation further away from Feds 2% target.

Wednesday saw a decline in the dollar against a number of currencies, after US retail sales fell by the most in 11 months in December.

The US dollar index for settlement in March was up 0.10% at 92.440 at 08:34 GMT, holding in a daily range of 92.510-92.320. The US currency gauge lost 0.17% on Wednesday to 92.345. 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.

Gold has scored a 4% increase since the beginning of the month, however, projections for the full year remain grim. UBS joined Barclays, Goldman Sachs and Societe Generale in projecting lower gold prices. Switzerlands largest bank said it now expects the yellow metal to reach $1 190, down from its previous projection of $1 200.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, marked their first decline for the week and dropped 0.23 tons on Wednesday to 707.59 tons. Changes in holdings typically move gold prices in the same direction.

Investors are also eyeing the political turmoil in Greece, which may lead to the countrys exit from the euro zone should the Syriza party win at the elections scheduled on January 25.

Pivot Points

According to Binary Tribune’s daily analysis, February gold’s central pivot point on the Comex stands at $1 234.7. If the contract breaks its first resistance level at $1 244.4, next barrier will be at $1 254.4. In case the second key resistance is broken, the precious metal may attempt to advance to $1 264.1.

If the contract manages to breach the S1 level at $1 224.7, it will next see support at $1 215.0. With this second key support broken, movement to the downside may extend to $1 205.0.