Gold prices have been more stable over the past couple of days following the wobble on Tuesday. The yellow metal was holding its own above the 200-day moving average and psychological support level of $1300 first thing this morning. Speculators were wondering whether the worst of the selling was over given that the metal had managed to hold above this key level on a closing basis for two consecutive sessions. But ahead of the long Easter weekend and the lack of European data speculators were hesitant to open fresh bold positions in either direction. So, the metal drifted aimlessly for much of the morning session.
In the afternoon, the price of gold started to head lower. This was in response to some forecast-beating US economic data and also cheerful corporate earnings results from the likes of banking giants Goldman Sachs and Morgan Stanley, and General Electric. The weekly US unemployment claims came in at 304,000 versus 316,000 expected. Claims thus rose only marginally from the previous week’s print of 300,000 which by the way was the best reading since May 2007. The Philly Fed manufacturing index meanwhile climbed to its highest level in six months with a reading of 16.6 for the month of March.
The better-than-expected data and earnings results helped to underpin both the dollar and equities, which is usually, and was the case this time, a deadly combination for buck-denominated gold. However, at the time of writing the metal was still managing to hold above a medium-term bullish trend line and was only just shy of that pivotal $1300 mark. Therefore it is still possible that gold prices could stage a comeback from these levels early next week. Otherwise a revisit of support at $1280 could be on the cards.
Figure 1:
Source: FOREX.com.
Figure 2:
Source: FOREX.com.
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