Gold Finds Balance as Market Paused, Awaiting Fed, ECB Meetings

August 27, 2012 – Comex gold futures have steadied in early US trading with the possibility of moving slightly slower on mild profit-taking pressure as the market pauses from last week’s impressive price gains. The gold price managed to achieve a new four-month high overnight, though the market is quieter starting the new trading week as London markets are closed for a Bank Holiday. Additionally, investors in the US and abroad are waiting for key central bank meetings that will decide monetary policy. Among these, the annual symposium of the US central banking system will begin this Friday in Jackson Hole, Wyoming.

Gold for December delivery traded $1.30 lower to $1,671.50 per troy ounce in early trading. The spot price of gold also drifted slightly, down $1.80 per troy ounce to $1,669.25 per troy ounce. Silver for December delivery on the Comex traded $0.0131 higher to $30.84 per troy ounce.

Federal Reserve Chairman Ben Bernanke is scheduled to speak on Friday at the symposium at Jackson Hole, Wyoming. The following weeks sees the monthly European Central Bank meeting on September 6. Anticipation for an announcement of additional monetary stimulus from both banks has only grown amid a deepening global slowdown and decidedly mixed economic data. Expectations are for markets to tread water in the coming days before the policy-deciding meetings.

The US dollar index is slightly lower in early Monday trading as the technical advantage favors a bearish stance in a five-week-old downtrend line still in place. Prices of crude oil are higher Monday as some movement toward the upside favors oil bulls. These two key outside markets are consistent with technical advantage in the gold market, according to Forbes.

After touching a fresh overnight four-month high, gold futures bulls have the technical momentum; though breakout above the psychologically significant $1,700 per troy ounce level is several moves away from current positioning.

Silver futures for December delivery also hit a new four-month high overnight. The market is bullish on silver, according to Forbes, with the next upside price breakout objective at $31.50 per troy ounce, above the solid technical resistance. There is solid technical support at $29.00 per troy ounce with preliminary levels at $30.74 and $30.50.

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