Breaking News

Gold futures - Weekly outlook: April 15 - 19

CommoditiesApr 14, 2013 05:55AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
Investing.com - Gold futures plunged into bear market territory on Friday, closing at the lowest level in 21 months as a bout of technical selling set in after prices broke below key support levels.  

Sentiment on the precious metal was dampened after minutes from the Federal Reserve’s most recent policy-setting meeting released earlier in the week showed the central bank is considering ending its bond-buying program sooner-than-expected.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank could bring quantitative easing, one of the biggest boosts to gold’s bull run, to an end this year.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery plummeted 5.25% on Friday to settle the week at USD1,482.65 a troy ounce.

Earlier in the session, Comex gold fell to USD1,481.45 a troy ounce, the weakest level since July 1, 2011. On the week, gold futures lost 6.2%, the biggest weekly decline since December 2011.

Gold prices were likely to find near-term support at USD1,478.05 a troy ounce, the low from July 1, 2011 and resistance at USD1,516.80, the high from July 5, 2011.

Gold’s losses accelerated sharply after prices broke below key support levels close to the USD1,535 and then the USD1,520-level, triggering a flurry of automatic sell orders amid bearish chart signals.

Prices of the precious metal are down nearly 23% since hitting an all-time high of USD1,920.80 an ounce in September 2011, meeting the standard for a bear market.

Market analysts have warned that gold prices could fall to as low as USD1,434.15 a troy ounce in the near-term, it’s 200-week moving average.

Gold prices came under pressure on Wednesday after minutes from the Fed’s March policy meeting showed that a number of FOMC participants saw QE tapering around midyear, while others believed it would probably be appropriate to slow purchases later in the year and to stop them by year-end.

One member wanted to slow the bond purchases immediately, while two members indicated that the purchases might well continue at the current pace at least through the end of the year.

News that Cyprus was to sell “the excess amount of gold” it owned to raise an estimated EUR400 million for its bailout also weighed on sentiment.

Cyprus had 13.9 metric tons of gold, valued at USD532 million, as of March 31, according to data from the World Gold Council.

Prices came under additional pressure after Goldman Sachs slashed its three-month gold price forecast to USD1,530 per ounce from a previous estimate of USD1,615 per ounce.

The investment bank also lowered its 12-month price forecast to USD1,390 from USD1,550, citing the weakening safe haven appeal of the precious metal.

In the coming week, the U.S. is to publish a broad range of economic data, with reports on manufacturing activity, the housing sector and inflation due for release.

Investors will be closely watching this data as they attempt to gauge the strength of the U.S. recovery. Any improvement in the U.S. economy could scale back expectations for further easing.

On Friday, data showed that U.S. retail sales fell 0.4% in March, the largest decline in nine months and missing expectations for a 0.1% increase.

A separate report showed that the preliminary reading of the University of Michigan’s consumer sentiment index fell to 72.3 in April, the lowest level since July, from a final reading of 78.6 in March.

Elsewhere on the Comex, silver for May delivery plunged 6.4% on Friday to settle the week at USD25.91 a troy ounce. Silver future prices lost 4.95% on the week, the fifth consecutive weekly decline.

Comex silver fell to USD25.86 a troy ounce earlier in the session, the lowest since November 18, 2010.

Silver has been on the decline given “weak industrial demand and mixed investor interest,” analysts at Barclays wrote in a research note last week.

Meanwhile, copper for May delivery tumbled 2.9% on Friday to close the week at USD3.334 a pound. On the week, Comex copper prices retreated 0.3%.

Copper traders will be looking ahead to flurry of Chinese economic reports due this week to gauge the strength of the world’s second largest economy and the largest consumer of the industrial metal.

China is to release official data on first quarter gross domestic product on Monday. Beijing is also to release government data on retail sales, industrial production and fixed asset investment.

Gold futures - Weekly outlook: April 15 - 19

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Are you sure you want to delete this chart?
Write your thoughts here
Replace the attached chart with a new chart ?
Post also to:
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email