Gold trading outlook: futures hold steady close to $1 280

Gold scored its biggest monthly increase in three years as investors sought the safety of the metal amid disappointing projections of global growth and steadied to trade around $1 280 an ounce after Fed officials boosted their prospects for the US economy.

Comex gold for delivery in April climbed 0.11% to $1 280.6 per troy ounce by 07:58 GMT, shifting in a daily range of $1 283.9-$1 279.1. The precious metal rose 1.86% to $1 279.2 on Friday.

Last Friday, Federal Reserve Bank of St. Louis President James Bullard assured that interest rates would not remain near close to zero much longer. Mr. Bullard added that the Fed will initiate its first interest rate hike in almost ten years by June, after policy makers boosted their assessment of the US economy growth to “solid”.

An eventual increase in borrowing costs would curb demand for non-interest-bearing assets, including gold.

However, Q4 US gross domestic product came below expectations of a 3% increase on Friday and landed at 2.6%, nearly half the expansion compared to the third quarter of 2014.

The US dollar index for settlement in March was up 0.01% at 95.010 at 07:53 GMT, holding in a daily range of 95.075-94.830. The US currency gauge fell 0.01% on Friday to 94.998. 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.

Additionally, Chinas factory sector contracted for the first time since 2012, according to the National Bureau of Statistics. A Sunday-released report showed that the Purchasing Managers Index dropped to 49.8 in January compared to a level of 50.1 in December.

“Overall theres a sense that the global economy is not doing well and that has boosted the safe-haven appeal of gold. In the short term, we should see gold stay above $1,250,” said Howie Lee, investment analyst at Phillip Futures, cited by CNBC.

Speculators once again boosted their buying bids during the week ended January 27, net-long positions in futures and options climbed 15% to 167 693, adding to a total of 80% increase since the beginning of 2015.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, did not change of Friday and remained at their highest level since October at 758.37 tons. Changes in holdings typically move gold prices in the same direction.

Pivot Points

According to Binary Tribune’s daily analysis, April gold’s central pivot point on the Comex stands at $1 274.0. If the contract breaks its first resistance level at $1 290.6, next barrier will be at $1 301.9. In case the second key resistance is broken, the precious metal may attempt to advance to $1 318.5.

If the contract manages to breach the S1 level at $1 262.7, it will next see support at $1 246.1. With this second key support broken, movement to the downside may extend to $1 234.8.