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Gold Still Stuck in a Trading Range
WHOLESALE gold bullion prices hovered just below $1670 an ounce Monday morning in London, having regained some ground after Friday’s losses, while stocks and commodities also ended the morning up on the day, while the Euro and the Chinese Yuan made gains against the Dollar.
“We saw a fair amount of buying from China [this morning] after gold prices fell last Friday,” says Peter Tse, Hong Kong-based director at bullion bank Scotia Mocatta.
“The Yuan hit a record high [against the Dollar], making local prices cheap…[but] gold is still range bound and I wouldn’t put too much on this morning’s rise.”
“Gold needs to sustain the close above the $1665 area to signal a move toward the $1695 area,” adds a note from Barclays Capital, whose analysts see support for gold at $1640 and resistance at $1680.
Open interest in gold futures and options on the New York Comex recovered last Tuesday compared to the previous Monday, climbing 3.4%, the weekly Commitments of Traders report from the Commodity Futures Trading Commission shows. The CFTC reported its lowest open interest in over three years for New Year’s Eve.
The so-called speculative net long however fell last Tuesday to its lowest level since August. The spec net long measures the difference between the number of ‘bullish’ long and ‘bearish’ short contracts held by traders classified as ‘noncommercial’, such as hedge funds.
“The fact that speculative financial investors are continuing to withdraw from the gold market is doubtless partly to blame for the gold price’s failure to make any substantial recovery,” says a note from Commerzbank.
“More and more ‘shaky hands’ are getting out of the gold market…[but] their current skepticism may offer a springboard for a sharp price rise in future were sentiment among money managers to shift again.”
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