After showing promising signs last week, spot gold price has remained more or less flat in this morning’s trade, with the yellow metal failing to breach the all-important psychological barrier of $1,700 per troy ounce.
The $1,700-level hasn’t been breached since March 2012, and the metal, which was trading at $1,686/oz at 11.15am UAE time (7.15am GMT) has seemingly failed to dent that level even today. Gold prices surged to a five-month high of $1,692.70 per ounce on Saturday, and gold bulls were hoping for bullion to clear the $1,700-mark in early trade this morning.
Nevertheless, not many expect gold to fall back to the $1,500- levels of earlier this year. While $1,650 was being seen as a strong resistance level only until last week, the $1,675-level is now being touted as a new support level.
On Saturday, prices broke through critical resistance at $1674.65, and the level has been recast as near-term support, with a break back below that exposing $1,645.76, says Ilya Spivak, Currency Strategist at Dailyfx.com.
Earlier, the precious metals markets – including gold, silver, palladium and platinum – took flight on Friday on remarks by Fed Chairman Ben Bernanke at a Fed symposium in Jackson Hole, Wyoming.
Gold and other precious metals surged on Friday and Saturday after Bernanke hinted at an additional round of quantitative easing, and said that the US central bank was closer to providing “additional policy accommodation as needed.”
Fresh quantitative easing (QE3) means the US central bank will print more money to pump in the local market – something that will devalue the dollar in real terms while pushing up the value of US-dollar-priced commodities, such as oil and precious metals.
Most analysts believe that gold and other precious metals might keep trending higher or at worst sideways this week unless some strong, fresh positive data signals renders QE3 unlikely.