Gold Price "Technicals Dominate" on Rally Above 200-dma In Face of Rising Dollar, Stocks, Rates
Friday, 2/21/2014 14:01
GOLD PRICE losses of 0.9% from yesterday were reversed Friday morning in London, taking the metal to $1323 per ounce, some $5 above last week's close.
World stock markets rose, and emerging-market bonds rose in price, after Ukrainian president Viktor Yanukovych
offered protesters an early election to end this week's bloodshed, in a deal witnessed by Russian and Eurozone ministers.
The US Dollar ticked higher vs. the Euro. Treasury bond prices slipped, nudging
10-year US interest rates above 1-week highs at 2.75%.
Strong trading volume on the Shanghai Gold Exchange saw Chinese premiums above world gold prices edge higher to $3 per ounce from Thursday's 3-month lows.
"More of the same," says a note from Standard Bank's trading desk in London.
"Buying in US, leading to selling overnight in Asia, keeping it a 'buy on dips' market."
Fundamental factors should be weighing against gold prices, the note adds, pointing to the rise in equities, bond yields and the US Dollar.
But for now, says Standard Bank, and with open interest rising in the
US gold futures market, "momentum still upwards – technicals will dominate."
Having breached the down-sloping channel in force since August, says technical analysis from Societe General, the gold price early this week "breached the rising channel [from New Year] and should pause."
"The 200-day moving average looks to be holding for gold," adds another bullion trading desk.
Thursday's London PM Gold Fix was set above its average of the previous 200 days for the fifth day in succession, the longest such run since January 2013.
Prior to last year, the gold price traded above its 200-day moving average 84% of the time since Jan. 2001.
Flat between April 2012 and April 2013 at $1660-1690, the gold price's 200-dma now sits at $1301.
"The overall action appears to be a bullish wedge," says technical analysis of the gold price from London market-maker
Scotia Mocatta's New York desk.
"Risk is for another run to the topside, with a break of $1332 targeting last major high seen October 28th at $1361."
A daily close in the gold price "above 1337.83 would be the next bullish development," says another market-maker's note, also pointing to the resistance above that as $1361.
Email us