End of Pain in Sight for Gold?
?Fundamentals? -? Gold futures have been hammered in recent weeks, largely due to the Fiscal Cliff talks. Prices have not improved, despite a compromise being reached, as the new concern becomes the possible end of easing from the Fed. The most recent FOMC minutes suggest the Bond buyback program may become a thing of the past. This has kept potential Gold buyers waiting in the wings for the time being.
Equity markets may very well dictate whether or not Gold stops its slide. Stock prices reached 5-year highs, suggesting the market could be a bit top-heavy at the present time. This, combined with the US Dollar firming, could be a barrier to a price recovery. It is not all doom and gloom for metal traders, however. The Bank of Japan indicated that it plans to double its holdings of the yellow metal. Chinese demand for Gold has also been on the rise.
Technical Notes – Turning to the chart, we see the February Gold contract trading near the 1650 level. So far, prices have halted their slide at this level. Failure to hold here suggests that prices may drift into the low 1600’s or, possibly, the mid-1500’s.
If prices manage to make their way above the 1700 mark, it could squeeze out shorts and bring fresh speculative buying. The RSI is currently at oversold levels, which may support prices in the near-term.
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