slid 2.5% to 3-week lows at $1220 per ounce Wednesday morning as the Dollar rose on the FX market and world stock markets crept higher as Brussels police continued to hunt suspects
in yesterday’s deadly terrorist attacks.
Government bond prices retreated, and US crude oil lost 1.3% to drop towards $40 per barrel – a 7-year low when reached at the tail-end of 2015.
The Chinese Yuan also slipped further from its strongest Dollar value of 2016 to date, as the International Monetary Fund denied rumors of any “secret deal”
between Washington and Beijing regarding FX rates at last month’s G-20 summit of major economy finance ministers.
Gold trading volumes in Shanghai’s main contract have so far doubled the daily average from 2015.
“There still seems to be some pressure
on [gold] from the Comex April rolls,” said Alex Thorndike at Swiss refining and finance group MKS’s Asian desk overnight, pointing to how speculators wanting to extend their bullish bets in futures and options need to sell March and buy April contracts – pushing current prices down – together with “ongoing position squaring/trimming into the Easter holiday period.
“My guess is we will try back towards the $1225-30 major support zone in the lead up to Easter, but that area should hold.”
“Short term,” says the latest technical analysis from French investment bank Societe Generale, gold prices are “forming a probable [head and shoulders]” – a bullish chart pattern
– “and a test of neckline at $1225/1220 looks likely.
“Graphical levels at $1190 will be important support.”
Looking at Tuesday’s brief rise in gold prices after the twin terror attacks in Belgian capital Brussels killed 31 and injured 260, “[that] move was really nothing more than a kneejerk reaction,” says a trading note from London broker Marex Spectron’s David Govett
“The gold market has pulled back sharply overnight…a perfectly understandable and somewhat overdue move as we see profit-taking and book-squaring ahead of Easter, the end of the month and the end of the first quarter.”
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