Trend indicators signal that we are in a range phase and buying interest ahead of a cluster of support in the 1270 area is keeping us neutral. A move below there would signal further downside toward the lows near 1180 where we would be looking for signs of a base and a push higher toward the 1434 range highs.
LONDON: The US Government and political uncertainty has failed to reignite safe haven buying in gold, according Barclays Research.
"The cocktail of delayed tapering, the US government shutdown and political uncertainty in Italy has failed to reignite safe haven buying in gold. Prices have endured downward pressure as the dollar has weakened further to February lows, US 10y Treasuries hover around levels last seen in early August and equity markets have eased to one month lows. Sentiment remains hesitant towards gold, which has been reflected in the market positioning. While the temporary US government shutdown has not proved to be a positive driver for prices, the risk of a debt ceiling breach holds scope to spark interest, in our view, given gold's response in 2011.
Price forecasts: Q4 2013:$1325/oz, 2013: $1425/oz Temporary shutdown of US Government has had a limited impact on gold prices but the risk of a debt ceiling breach holds scope to reignite interest.
"If the US runs out of borrowing authority after 17 October, our economists expect a delayed payment regime to be implemented. Having said this, our economists and rates strategists believe the current crisis over the continuing resolution reduces the probability of a new political crisis over the debt ceiling (A negative open for the US, 2 October 2013)," Barclays said.
Trend indicators signal that we are in a range phase and buying interest ahead of a cluster of support in the 1270 area is keeping us neutral. A move below there would signal further downside toward the lows near 1180 where we would be looking for signs of a base and a push higher toward the 1434 range highs. Ultimately it would take a break above the 1522 area to confirm that the upside is gaining traction toward our greater target near 1800. -Resistance: 1344, 1375, Support: 1270, 1234.
Indian demand for gold has firmed up on festival demand,good monsoon and stronger Rupee that gives a $5-10 discount per ounce over London prices.
courtesy of bullionstreet
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