Treading Water
Today’s Spotlight Market
Gold traders shrugged off the negative outside market developments to post sharply higher yesterday. In fact, it was the best one day rally for Gold in more than a year. After OPEC decided not to take action and trimming production. This drove energy and metal markets lower, initially. The US Dollar Index also rallied to its highest level since 2009. Gold shrugged off these negative developments to post strong gains on positive physical demand from India as well as signs that value buyers could give prices a lift.
Fundamentals
Gold traders have been keeping a close eye on India during the wedding season, which is a key driver of jewelry demand.? India is expected to import more than 100 tonnes of Gold in November, which would mark the third consecutive monthly imports in excess of 100 tonnes.? Traders were pleasantly surprised by the lack of action from the Indian government with regard to import restrictions. Previously, the government had stepped in to limit imports in order to stabilize local prices.? Switzerland announced that it plans to require the Swiss National Bank to hold 20 percent of its reserves in Gold within 5 years.? This would mean the banks would have to purchase 1500 metric tonnes of the metal to meet current reserve requirements.? While Indian and Swiss demand for Gold are certainly positive for Gold, whether or not the metal can sustain rallies could hinge on the direction of the US Dollar.? If the greenback continues to make gains, it could be extremely difficult for Gold to maintain positive momentum.?? ?
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the February Gold contract closing above the 1200 level.? If the Gold is able to hold on to gains above the level, the market may be able to build some sustainable momentum.? Prices have had multiple closes above the 20-day moving average, suggesting that a near-term low may be in place.? The Feb contract did close above the 50-day moving average, but not in convincing fashion.? If prices can hold the 50 day average, it could be a sign that the market is gaining some traction.
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