Gold held near the highest in four months on Monday as investors sought safety in the metal amid volatile markets and ahead of the European Central Banks policy meeting.
Comex gold for delivery in February was down 0.02% at $1 276.6 per troy ounce at 08:26 GMT, shifting in a daily range of $1 282.0 – $1 274.8. The precious metal settled 0.96% higher on Friday at $1 276.9.
Markets were rattled after the Swiss National Bank unexpectedly removed a three-year-old cap of it currency against the euro last week, which resulted in a 30% increase in value for the franc. Concerned about the fallout of the move, gold traders launched a wave of safe-haven bids.
The decision also came ahead of ECBs policy meeting scheduled for January 22, during which official are expected to announce a bond-buying program as a measure to fight deflation.
“Volatility in European currency markets encouraged further gold safe-haven demand,” said ANZ analyst Victor Thianpiriya, cited by CNBC. “Gold physically-backed ETF inflows … if sustained will likely support higher gold prices in the medium-term.”
Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, marked their biggest daily increase since May 2010 and climbed 13.74 tons on Friday to 730.89 tons. Changes in holdings typically move gold prices in the same direction.
Adding instability to the European markets is the threat of Greece leaving the Eurozone. The country may be the first to depart the 19-member group should the Syriza party win at the elections scheduled on January 25.
Gold also received support from increased physical demand in China, the metals largest consumer, as people exchange gold gifts for good luck during the Lunar New Year holiday celebrated on February 19th and 20th.
Trading on Monday is expected to be not very active, as the US celebrates the Martin Luther King, Jr. Day. However, activity is projected to pick up during the eventful week.
The National Bureau of Statistics is expected to report on Tuesday that the Chinese economy expanded at the annual rate of 7.2% in the fourth quarter, falling for a second straight quarter below the government’s targeted 7.5%. If confirmed, it would bring full-year growth below the target and would be the slowest in 24 years. Meanwhile the Bank of Japans two-day policy meeting is also scheduled to kick off tomorrow.
The US dollar index for settlement in March was up 0.01% at 92.900 at 08:42 GMT. The US currency gauge gained 0.30% on Friday to 92.890, holding in a daily range of 93.565 – 92.380. 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.
Pivot Points
According to Binary Tribune’s daily analysis, February gold’s central pivot point on the Comex stands at $1 271.5. If the contract breaks its first resistance level at $1 287.8, next barrier will be at $1 298.7. In case the second key resistance is broken, the precious metal may attempt to advance to $1 315.0.
If the contract manages to breach the S1 level at $1 260.6, it will next see support at $1 244.3. With this second key support broken, movement to the downside may extend to $1 233.4.
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