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Gold Lower on Profit Taking, Chart Consolidation

August 30, 2012 – Prices of Comex gold futures are slightly lower in early US trading on Thursday on more profit-taking and chart consolidation. Gold and silver markets retain a near-term bullish technical posture, according to Forbes, and bull flags may be in the process of forming in the daily charts for both precious metals.

Overall market activity is relatively quiet as markets and investors anxiously wait for Friday’s speech by US Federal Reserve Chairman Ben Bernanke in Jackson Hole, Wyoming, on Friday.

Gold for December delivery drifted $3.20 to $1,659.70 per troy ounce as the spot price of gold gained $0.90 per tory ounce to $1,657.50. December delivery of Comex silver lost $0.117 to $30.81 per troy ounce.

Markets remain relatively subdued ahead of Bernanke’s speech in Jackson Hole, with a wait-and-see attitude prevailing. Next week, the monthly European Central bank meeting will be a much-watched event in markets as investors wait to see how the central bank will decide policy to combat extremely high costs of borrowing in Spain and Italy.

There is some anticipation in the markets that both the US Federal Reserve and the ECB will announce fresh monetary stimulus measures at the meetings in place in the coming week.

According to Forbes’ analysis, odds do not necessarily favor an announcement of quantitative easing at Jackson Hole, but there is higher chance of some stimulus being announced next week at the ECB meeting.

Chinese Premiere Wen Jiabo said overnight that his country would continue to purchase European debt, which has bolstered the euro in currency markets and will certainly impact the ECB meeting next week. A bond auction in Italy brought in lower yields than last month, hinting there is growing optimism that stability may be forming in the European debt crisis, long viewed as in free fall by many investors.

US economic data to be released Thursday includes the weekly jobless claims report, personal income and outlays, the Kansas City Fed manufacturing survey, and ICSC chain store sales trends. It is unlikely any of these reports could be dramatic enough to change the outcome of the Jackson Hole meeting, but they could change risk appetite in markets for the day.

In London, the AM price fix for gold registered at $1,657.00 per troy ounce against $1,664.25 on the previous day.

Technically, December gold futures bulls retain the near-term technical momentum and advantage, according to Forbes.

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