Gold gained on Friday to trim losses from previous sessions as the robust dollar took a breather, but the metal is headed for a yet another weekly loss as traders continue to expect a sooner increase in U.S. interest rates.
Comex gold for delivery in April was up 0.57% at $1 158.5 per troy ounce at 7:42 GMT, shifting in a daily range of $1 160.9 and $1 152.2. The precious metal dropped 0.11% on Thursday to $1 151.9. Earlier this week the metal fell to its lowest since December 1st at $1 146.5 and is now headed for its sixth weekly slide in seven.
Gold took a large hit last Friday when the Labor Department showed stronger-than-expected non-farm payrolls numbers and bolstered speculations that the Federal Reserve will initiate its first interest rate hike since 2006 sooner rather than later.
The precious metal reached a peak in January and was nearly 9% up for the year, but the metal nullified those gains and is now trading in the red for 2015. In 2014, some of the major banks projected that the metal will drop this year.
The next Fed policy meeting is scheduled on March 17-18th, when policy makers are expected to drop their “patient” approach as a robust dollar, strength in the labor market and several policy makers backing a sooner increase in rates all weight in favor of the move.
However, Fed Chair Janet Yellen has previously warned that she wants to be “reasonably confident” that inflation is likely to reach its desired level before launching the increase in borrowing costs. Policy makers have targeted an inflation level of 2%, but the metric has been pressured down by the plunge of oil prices.
Many analysts and investors are expecting the Federal Reserve to boost rates either in June or September. An eventual increase would dent demand for all non-interest-bearing assets, including gold, while also boosting the already robust dollar.
Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, dropped 2.09 tons on Thursday to 753.04 tons, the lowest since late January.
The U.S. dollar index for settlement in March traded 0.04% higher at 99.455 at 7:43 GMT, shifting in a daily range of 99.650 and 99.180. The U.S. currency gauge fell 0.37% on Thursday to 99.411, having previously risen to 100.065, its highest since April 2003.
“Gold looks to be finding some support around $1 150 although the short-to-medium term bias is still to the downside,” MKS Group trader James Gardiner said, cited by Reuters.
Pivot Points
According to Binary Tribune’s daily analysis, April gold’s central pivot point on the Comex stands at $1 155.0. If the contract breaks its first resistance level at $1 162.6, next barrier will be at $1 173.2. In case the second key resistance is broken, the precious metal may attempt to advance to $1 180.8.
If the contract manages to breach the S1 level at $1 144.4, it will next see support at $1 136.8. With this second key support broken, movement to the downside may extend to $1 126.2.
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