seen at $1,500 in first quarter G Shirsat / Mumbai
January 16, 2011, 0:45 IST
Gold futures for February delivery fell in the New York
Mercantile Exchange to the lowest settlement price in seven
weeks on speculation that European Union leaders will stabilise
the region’s economy. The euro is headed for the biggest
weekly gain against the dollar since May 2009. Gold futures
fell $36.30 over its weekly high of $1,392.90 to a low of
$1,354.60 and settled at $1,360.50 an ounce on Friday on
the Comex in New York, the lowest closing price since November
22. This week, gold dropped 0.6 per cent, the second straight
rally in precious metals is likely to move in a narrow band
next week with a time-price opportunities (TPO)-based target
of $1,397.50, the Bloomberg’s market picture chart
suggests. Strong support is expected around $1,350, based
on significant put writing in the $1,350-strike put options.
The 21 days moving average indicates an upside of $1,400
and support at $1,352.70. The traders sold the $1,400-strike
call options on expectation of strong resistance above that
The weekly trading volume in February futures is hinting
at a TPO-based downside around $1.340. The volume-based
support is expected around $1,350.50, the market picture
chart suggests. The initial balance range ($1,372-1,377)
for the week saw only eight per cent trades, which indicates
lack of interest among day traders and liquidity suppliers.
The value area saw 70 per cent volume in the range of $1,359-1,372,
mostly through change of hands. The buying support was below
$1,366, the weekly trade summary matrix suggested.
Gold holdings in the SPDR Gold Trust, the biggest exchange-traded
fund backed by bullion, decreased 11.83 metric tonnes to
1,259.33 metric tonnes on January 14, according to figures
on the company’s website. Hedge-fund managers and
other large speculators decreased their net-long positions
in New York gold futures in the week ended January 11, according
to US Commodity Futures Trading Commission data.
Nevertheless, Gold is likely to reach $1,500 per ounce
in the first quarter, and then may retreat if the market
expects central banks to exit quantitative easing, according
to Dong Tao, an economist at Credit Suisse Group AG. In
the long term, as inflation entered a new era, gold might
rise above $2,000 in the next 5 to 10 years, he said.