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U.S. Markets Pause on Storm, Growth Concerns

October 29, 2012 - Gold found strong support at the $1,700 per troy ounce level after dips in trading last week revived fears that the correction in gold would take it much lower, though the market is seen as lacking the necessary drivers at the current time to continue its trajectory upward.

The $1,700 level has been repeatedly tested in the gold market, reassuring buyers who feared a deeper correction following a six-week low at $1,698.39 on October 24, according to Reuters.

Recent downbeat corporate earnings reports, uncertainty over the direction of the European Union’s sovereign debt crisis, and a major hurricane battering the East Coast of the U.S. are contributory factors to a lack of drivers in the gold market to start the week.

U.S. stock markets will be closed on Monday and possibly on Tuesday, according to the operator of the New York Stock Exchange, as the East Coast endures Hurricane Sandy. Public transit in New York City has been shut down, though some online trading is set to continue.

The spot price of gold lost 0.1 percent to $1,709.30 per troy ounce as U.S. gold futures for December delivery dropped $1.90 per troy ounce to $1,709.90.

Hedge funds and money managers have cut their bullish bets in gold and silver futures on fresh concerns over the U.S. Federal Reserve’s monetary stimulus. Friday will feature the release of the U.S. jobs report, which will be analyzed by traders for an indication as to the Federal Reserve’s stimulus in effect and projection. The Fed has tied the continuation of its stimulus to the labor market.

Precious metals have been sluggish if not down across the board, and silver is no exception in early trading on Monday with the spot price down 0.8 percent to $31.75 per troy ounce. Silver futures contracts for December delivery continue to hover near a seven-week low and prices on the daily bar chart are in a four-week-old downtrend. Silver has support at $31.535 and $31.25 as well as resistance at $32.00 on the upside.

Last week’s high of $1,731.20 per troy ounce is the technical resistance on the upside for gold with the psychologically important $1,700 per troy ounce level providing solid support on the downside.

 

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer - Gold-Bullion.org

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