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Gold Firm on Short Covering, Bargain Hunting, Weak U.S. Dollar

March 7, 2013 - The price of gold futures are trading modestly higher in midmorning trade in the U.S. as a lower U.S. dollar index has prompted both short covering and bargain hunting in the gold and silver markets. Economic reports due for release in the next few days are awaited as traders and investors look for more definitive direction on the markets, particularly as pertaining to the central banks.

U.S. gold futures for April delivery gained $6.00 to $1,580.90 per troy ounce as the spot price of gold quoted down a modest $2.40 to $1,582.50 per troy ounce.

A successful Spanish bond auction boosted the euro currency and European stock markets on Thursday as good investor demand and lower yields brought confidence to markets. The European Central Bank also held its monthly meeting on Thursday and it announced no major changes to its monetary policy, as expected.

The employment situation report for February, widely regarded as the most important U.S. economic report of the month, is due out February morning and will be analyzed by investors looking for a stronger indication as to the central bank’s intentions. Typically there is an uptick in active trading immediately following the release of the report.

Trends indicate that investors demand for physical gold and silver has increased recently with the lower price levels being achieved.

The U.S. dollar is trading lower on Thursday morning, due to some profit taking from recent gains that pushed the index to a six-month high this week. A lower U.S. dollar is beneficial to the gold market as it makes the price of gold more affordable for holders of foreign currency, thereby invigorating physical demand for gold and silver bullion.

The next upside price breakout objective is a close above the solid technical resistance at last week’s high of $1,619.70 per troy ounce. There is solid technical support at the February low of $1,554.30 per troy ounce. On the upside, resistance is at this week’s high of $1,585.80 per troy ounce and then at $1,590.00 per troy ounce. There is support at $1,575.00 and last week’s low of $1,564.00 per troy ounce.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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