Gold spot price: South-bound so far today

SPDR Gold Trust a net seller

Gold spot price: South-bound so far today Monday, November 18th:_ The XAU/USD last week opened at 1288.00 and closed at 1289.33, adding 0.12 percent in value. The price initially dropped to a low of 1261.28 – the lowest point since 15 October – then rebounded under the dual pressures of the 4H MACD (9,12,1) convergence and the daily stochastic exiting the oversold zone – below its 20-line. Last week’s high was at 1294.25.

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In today’s trading so far, gold has been moving between 1289.52 and 1277.48. At press time the pairing is changing hands at 1283.65. The price action found support at the slightly ascending 89-hour simple moving average which has been acting as an obstacle for bears since 14 November, on which date Janet Yellen as Fed chair nominee told the US Senate Banking Committee that she would continue to maintain the record stimulus program until the US economy became stronger.

The gold spot price has been heading south within a descending channel since 28 August and currently is trading around the middle of the pattern.

Heading into the new week, gold could experience bearish pressure from money managers and hedge funds emulating the action of the past two weeks and cutting bullish bets on the metal.

Between 2005 and late 2012, SPDR Gold Trust (GLD) and its smaller rival iShares (IAU) were adding an average 45 tons to their collective inventories every three months, but this year both have turned into net sellers. Together, the two dealers have sold about 160 tons per quarter, accounting for two-thirds of 2013′s total gold ETF sales of 700 tons.

Gold ETFs have been steadily declining over the past weeks as traders have tried to discern future action of the Federal Open Market Committee and, specifically, the duration of its $85 billion per month injection into the US money markets. Most analysts are expecting tapering to begin from March but traders in gold will carefully scrutinise the minutes of the 29-30 October meeting for clues of QE trimming. The FOMC meets for the final time this year on 18 December.

Managing director of Globlex Holdings Management (Bangkok) Songwut Apirakkhit said today: "I think markets have already priced in Yellen's nomination and the tapering being pushed to next year". He added that "as long as prices are still below $1,300, we think gold is in a bear market. We will change our view to neutral if the price goes above that level.”

US TIC Long-Term Purchases for September came out today, showing a $25.5 billion difference between foreign long-term securities purchased by US citizens and US long-term securities purchased by foreigners, beating expectations for $21.3 billion.

The NAHB Housing Market Index was also released today, falling to 54 points this month from 55 in October, whereas analysts had expected a rise to 56.

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The gold spot price oscillated following these data releases, though holding around the 89-hour SMA.

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