Most of the first week of October, spot gold prices have been range bound, after experiencing wild volatility swings by the end of the previous month.
Gold prices have tentatively edged their way higher last week, as risk sentiment and equity markets are undoubtedly looking more buoyant, especially after Thursday‘s central bank meetings presented markets with an array of extra liquidity and stimulus measures to try to help lift the subdued growth outlook. Commodities and stocks got also a boost from a better-than-expected report on the U.S. job market, but that lift was short-lived as market players looked closer at the numbers.
Gold for December delivery lost $17.40, or 1.1% to $1,635.80 an ounce on the the New York Mercantile Exchange. However, on the week gold gained 0.8%, which snapped a four-week losing streak for the metal.
Major support may well still be seen around $1580, after gold traded down to $1583.82 during the Asian session at the end of September. The move may have been slightly over extended, as traders and investors were concerned that there was no foreseeable solution to contain Europe‘s debt crisis. At the time, Asian market players (in particular) may have been over cautious and taken gold down to oversold levels prior the European opening. Since a new low of $1583.82 posted on the 29th September, the yellow metal’s prices have recovered hesitantly.
Now, resistance is seen at $1681.10, which is a 38.2 Fibonacci retracement from the record high of $1921.15 seen on the 6th September, to the recent lows seen at the end of September‘s rout of $1532.72. Major resistance is projected at $1726.94.
However, gold bulls may feel still unsure this week as the US dollar has corrected back quite sharply from its recent gains, and yet gold has showed no sign of rallying back up.
In addition, the Asian region has only seen moderate gains posted in the spot market.
