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Gold Firmer, Dollar Weaker

November 23, 2012 - Trading is subdued on Friday morning following the U.S. Thanksgiving holiday as a weaker U.S. dollar index and bullish near-term technical fundamentals bring a quiet confidence to the gold market.

U.S. gold futures for December delivery gained $5.80 to $1,734.00 per troy ounce as the spot price of gold quoted up $3.80 to $1,734.00 per troy ounce as well. U.S. silver futures for December delivery gained $0.085 to $33.435 per troy ounce, outperforming gold with a 3.5 percent rise on the week in line.

Stronger than expected Ifo business confidence reading reported out of Germany on Friday brought about an optimistic environment in which the euro is at a three-week high against the dollar. A key meeting of Eurozone leaders on Monday, at which time it is widely expected some headway will be made on Greece’s debt, will decide when and how to disburse fresh bailout funds to the cash-starved Mediterranean country. The finance minister of Finland said on Friday she expects there to be an agreement on Monday.

As the U.S. dollar index drops, demand for gold is bolstering the spot price. Typically, a weaker dollar is bullish for gold because it makes the asset less expensive for buyers holding foreign currency.

Technical analysis at Forbes suggests gold bulls have the overall near-term and longer-term technical advantage. Following the technical consolidation and sideways chart action of the past couple weeks, gold bulls have an upside price breakout objective above the resistance at the November high of $1,739.40 per troy ounce. There is support on the downside at $1,727.60 and $1,720.00.

December silver futures bulls also have the overall near-term technical advantage with prices hitting a fresh six-week high overnight and the price of silver outperforming gold ready to realize a 3.5 percent gain on the week. A close above technical resistance at $34.00 per troy ounce is the next breakout point for silver bulls with resistance at $33.50 and $33.75. There is support at the overnight low of $33.235 and $33.00.

While the optimism in Europe will not lend safe haven investment demand to the gold market, there is more than enough concern over the U.S. fiscal cliff scenario to bring safe haven demand to the market. The weaker dollar against the euro currency is certainly bringing investor demand as the price break is a dip investors have been waiting for since the strong dollar began with the initiation of QE3 in mid-September.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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