Gold eased early Friday, paring some of yesterday`s rally that took prices to almost a five-week high, heading to its second weekly gain in more than two months.
The precious metals market saw some profit taking in the final hours of trade in Asia, after the yellow metal climbed to the highest level in nearly five weeks yesterday, pushed by the soft dollar amid growing expectations the Federal Reserve will postpone its billion-friendly monetary stimulus for longer period.
Spot gold was down 0.41% at $1,341.26 an ounce at 02:55 EST, compared with yesterday`s close at $1,346.75 in New york. Meanwhile, the trading range is between $1,340.88 and $1,348.05.
Gold hit a fresh weekly high of $1,351.81 on Thursday, after preliminary PMI data showed China`s manufacturing sector expanded at the fastest pace in seven months in October. The HSBC/Markit PMI was at 50.9, up from September`s final reading of 50.2. China is the world`s second-largest gold consumer, after India.
The soft dollar continues to support sentiment towards bullions, as pressure on the U.S. currency continues amid expectations the Fed tapering would be postponed.
The Dollar Index (USDIX) fell to 79.12 from 79.30, after hitting an intraday high of 79.31 in Asia, up from 79.06 low hit early Friday.
The euro is trading near its fresh two-year high of $1.3831 against the dollar, flushing away disappointing eurozone data that showed business activity unexpectedly slowed in October.
On the chart, we can clearly see that gold prices reached $1,350 resistance, signaling a pullback after testing this key resistance, a break above $1,350 is necessary to confirm the upside movement.
The bullish wave remains intact and will possibly continue. However, a minor retracement isn`t ruled out as momentum indicators signal overbought conditions.