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(Kitco News) – After a strong start, the gold market is preparing to end the week with a bang, as new life in the US dollar keeps the precious metal close to critical support.
December gold futures traded last at $ 1,924.30 an ounce, 1% down on the day. According to some analysts, it will be important for gold to keep support around $ 1,920.
“A lot of stop-loss orders are likely to be placed below, so it will be important to maintain this support area. Otherwise, the correction could take significantly longer, ”said analysts at Commerzbank.
Renewed weakness in gold also comes as weak economic data weighs on the euro, boosting the US dollar.
The greenback also attracts some bargain hunters after falling earlier this week after a two-year downturn. The IHS Markit’s Flash Composite Purchasing Managers’ Index for the Eurozone fell to 51.6 from the last reading of July of 54.9. The figures for August were less than expected.
According to Eurozone PMI data, IHS will release its preliminary report for the US at 9:45 a.m. Eastern time.
According to some currency analysts, the greenback is also attracting some bargain hunters, as the US dollar index fell earlier in the week to a new two-year high. The index traded last at 93.26, up 0.63% on the day.
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Although the gold market expects to see its second week of loss, sentiment remains fairly positive. Many analysts see the current price action as a healthy consolidation period. Some analysts do not rule out lower prices, and some even see the potential for prices to test support around $ 1800 per ounce.
“Regardless of recent losses, the foundations remain in favor of higher Gold prices with a rebound potential on the charts,” said Lukman, senior research analyst at FXTM. “A broadly weaker dollar, negative U.S. earnings, election jitters, and emerging cases of coronavirus in the United States are likely to hold gold in the medium to long term.”
George Gero, managing director at RBC Wealth Management, said that while gold is fighting to make a bid Friday, options in the futures market have increased, an indication that investors are actively continuing their bets.
He added that he continues to expect gold investors to continue buying on dips.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither does Kitco Metals Inc. nor can the author guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article does not accept any liability for loss and / or damage resulting from the use of this publication.
