Last Friday, gold futures ended lower on the New York Mercantile Exchange’s Comex division, coming off a seven-month high in the previous session. The trading session capped a winning quarter, in which futures gained the most since the April-June period in 2010.
Gold for December delivery ended $6.60 lower, or 0.4%, to settle at $1,773.90 an ounce. The yellow metal gained 11% on the quarter.
In recent days, gold prices are finding underlying support from ultra-loose monetary policy and rising European debt problems. This could give gold further strength in the coming week, after the August rally on expectations and September announcements of monetary easing in the U.S. and elsewhere. Fears of currency debasement and inflation are on the rise again, boosting the gold prices.
Some traders expect the market to move over $2,000 by the end of the year.
However, from short term perspective, after such a strong rally, gold could also retrace the recent gains and prices may slide next week.
So far, gold prices seem to be in a holding pattern and it will take some time to digest the current rally.
After a short rebound last week, the Gold/Silver ratio resumed its decline. Silver has performed the best in the complex so far this year. The precious metal has gained +23.9%, compared with platinum’s 18.4%, gold’s +13.2% and palladium’s drop of -2.78%.
In the coming week, more sideway trading may be seen.
Gold consolidated below $1790 last week and despite a rally attempt, the metal is limited below this mark IMO.
As long as $1720, the minor support holds, the prise rise is expected to continue.
A clear crack of $1792.7/$1804.4, the resistance zone, will have larger bullish implication and will show the way to $1923.7, the historical high. But, a break of $1720 will indicate near term reversal and will turn outlook bearish for a move to $1674, the first key support.
In the long run, price actions from $1923.7 high are seen as a medium term consolidation pattern. There is no indication that this consolidation is finished, and more range trading could be seen.
There is no change in the long term bullish outlook for gold. While some more medium term consolidation cannot be ruled out, a break of $2000 level looks more probable sooner or later.
*Further Reading:
- Top Rated Books for Silver Traders Review
- Top Rated Books for Gold Traders Review
- Social Media for Stock Market Traders
