Gold’s Price Today Finds Support Below $1250

19/03/2016 03:35 AST

With mixed market influences on Friday and consolidation into the weekend, gold’s price today eventually found solid support below US$1250 per ounce.

Gold prices have climbed to highs just above US$1265 in early Asian trading on Friday as it attempted to re-establish bullish momentum, but was unable to sustain this level. Global influences had a mixed influence during the day as the general theme was consolidation after big price swings over the past few days. Bulls were again troubled by the inability to hit fresh 2016 highs this week despite a slide in the dollar.

European bourses were slightly higher over the day while oil prices maintained a firm tone with WTI building on a break above the key US$40 p/b level and pushing to highs above US41. On the currency front, although the dollar managed to stabilise after its pounding over the previous 36 hours, it remained generally on the defensive as EUR/USD settled just below the 1.1300 level and within 50 pips of yesterday’s 5-week highs.

Given these influences, gold under-performed significantly and dipped sharply in the European session to lows below US$1248 with the demand for the metal undermined by generally more favourable risk conditions on hopes that global central banks would boost global demand.

The US University of Michigan consumer confidence index was slightly lower than expected at 90.0 for the preliminary March reading from 91.7 previously, but one-year inflation expectations rose to 2.7% from 2.5% and economic data had little impact. Fed speakers Dudley and Rosengren also made no comments on monetary policy. As trading volumes ebbed late in the European session, gold settled around US$1254 having found solid demand below US$1250.

The latest Comex gold positioning data will be watched closely over the weekend for evidence on whether there has been a further decline in net short positions, although the data snapshot will have been taken before the Fed statement.

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