On Wednesday’s session the Comex gold futures recorded good gains. The recovery move was caused by strong investors’ buying after the recent price slump of around $200 an ounce. After the last week’s market crash, global demand for physical gold is still solid. Non-market drivers also came in support for gold. Crude oil prices were sharply higher while the US dollar index dipped.
During Asian trading hours gold futures for June delivery rose by 1.5% gaining $21.90 to trade at $1,445.90 per ounce. Yesterday June Comex gold last traded up $18.50 at $1,427.30 an ounce.
There is still very strong physical gold demand mostly from Asia. That causes robust support to the market. This week many reports noted gold bars and coins shortages around the world. Therefore gold retailers spiked up their charged premiums over the spot yellow metal’s price.
Recently on gold futures market is speculated for something called short squeeze. It appears when short sellers are forced to buy back losing positions at much higher cost. Therefore, the market squeezes them out.
Toward the end of 2013 first quarter, the US manufacturing activity slowed. The marginally weak data reports brought back the concerns about the recovery of the US economy.
If more clues for economic hampering appear, the U.S. Federal Reserve would be less likely to announce an early end of its monetary policies. And it is a broad fact that quantitative easing has been a strong gold underpin.
On Wednesday June gold futures ended nearer the session high from technical aspect. The market got stabile on bulls support. That hinted for a near-term market bottom that could be occurring. Yet, the yellow metal is still in a 6 month downtrend. Hence, the bears still have the overall technical advantage. Next upside near-term price breakout for gold bulls is seen close above resistance at $1,450.00 per ounce. Next near-term downside breakout for bears is closing prices below support at $1,400.00 per ounce.
