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 decline.

The 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 level.

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.