Gold Prices Starts Week Hovering Around Support At $1,200

Gold Prices Starts Week Hovering Around Initial Support At $1,200

 Gold prices are starting the week holding on to recent gains, hovering around initial support at $1,200 an ounce.

Electronic trading of Comex December gold futures opened the Sunday North American evening/Monday Asian session at $1,199.90 an ounce, relatively up from Friday's pit close of $1,197.70 an ounce.

About 40 minutes after the open, gold futures reached an early session high of $1,203.80 an ounce. Since then prices have been trading in a modestly tight range; as of 9:36 p.m. EST December gold was at $1,200.40 an ounce.

Electronic trading of Comex December silver futures opened the Sunday evening/Monday morning session at $16.365 an ounce, slightly down from Friday's pit close of $16.395 an ounce. Similar to gold, the silver market has traded in a small range; as of 9:36 p.m. EST, December silver was at $16.405 an ounce.

Victor Thianpiriya, commodity strategist at ANZ, said that although gold is holding on to some of its strength the market remains positioned for lower prices in the near-term.

On a technical basis he said $1,200 will continue to act as strong initial support. The next level on the upside he is watching is the mid-October high of $1,255 an ounce.

However, Thianpiriya said that he expects the U.S. dollar will remain strong and in turn hurt the gold market.

“All the growth right now is in the U.S. and that is positive for the U.S. Dollar, negative for gold,” he said. “I don’t think the market has fully priced in the Federal Reserve’s next move.”

Chris Weston, commodity analyst at IG Markets, said that although he is generally bearish on gold, momentum appears to be supporting prices in the near-term.

However, Weston added that prices could move higher next week as traders exit their short positions ahead of Switzerland’s Gold Referendum. Polls shows that there isn’t enough support for the vote to pass, but Weston added that the risks still aren’t worth it, on the outside chance that it passes.

“Gold prices could easily rally $50 an ounce in one session if the vote passes, which I think is unlikely,” he said.

Looking at technicals, Weston said that the key level in gold will be $1,208 an ounce. He added prices need to break above that to test the next major resistance level of $1,276 an ounce.

Analysts from HSBC said in a note published Friday that gold needs a “convincing close” above $1,200 an ounce to encourage further gains in the marketplace.