Gold Technical Analysis/Sentiment Update – 8th November 2012
- Gold gave back earlier gains after reaching fresh November highs on Wednesday 7th November, closing marginally higher on the day. This came as market participants turned their attention to the U.S. “fiscal cliff”, after President Obama defeated Mitt Romney, his Republican challenger. Market sentiment turned towards a risk aversion environment and the Dow Jones Industrial Average dropped around 2.5% on the daily basis, closing around 12,932.73 and experiencing its worst loss this year.
- Trading volume was up today, by around 53 percent over the 250-day average for U.S. gold futures.
- Concerns around the fiscal crisis and associated deflationary forces could weigh on the precious metal.
- Nonetheless, the price of gold is trading above the key $1700 per oz level after finding support and erasing the losses seen late last week.
- The $1700 psychological round number level once again came into play, as a support area on Wednesday, with a session low of $1703.80 hit before demand kicked in from gold bulls.
- The $1735 area continues to be a potential upside resistance zone and is located around the mid point of the last swing lower. This area also held as support on the 26/9/2012 and is close to this weeks range highs.
- Ten-year U.S. yields dropped 12 basis points to 1.64 percent. The US dollar index rose to a two-month high, peaking at 80.92. This was the highest level seen for the USDX since September 7th as risk aversion flows dominated.
Gold XAUUSD D1