Gold
seen at $1,500 in first quarter G Shirsat / Mumbai
January 16, 2011, 0:45 IST
Gold futures for February delivery fell
in the New York Mercantile Exchange to the lowest settlement
price in seven weeks on speculation that European Union
leaders will stabilise the region’s economy. The euro
is headed for the biggest weekly gain against the dollar
since May 2009. Gold futures fell $36.30 over its weekly
high of $1,392.90 to a low of $1,354.60 and settled at $1,360.50
an ounce on Friday on the Comex in New York, the lowest
closing price since November 22. This week, gold dropped
0.6 per cent, the second straight decline.
The
rally in precious metals is likely to move in a narrow band
next week with a time-price opportunities (TPO)-based target
of $1,397.50, the Bloomberg’s market picture chart
suggests. Strong support is expected around $1,350, based
on significant put writing in the $1,350-strike put options.
The 21 days moving average indicates an upside of $1,400
and support at $1,352.70. The traders sold the $1,400-strike
call options on expectation of strong resistance above that
level.
The weekly trading volume in February futures
is hinting at a TPO-based downside around $1.340. The volume-based
support is expected around $1,350.50, the market picture
chart suggests. The initial balance range ($1,372-1,377)
for the week saw only eight per cent trades, which indicates
lack of interest among day traders and liquidity suppliers.
The value area saw 70 per cent volume in the range of $1,359-1,372,
mostly through change of hands. The buying support was below
$1,366, the weekly trade summary matrix suggested.
Gold holdings in the SPDR Gold Trust, the
biggest exchange-traded fund backed by bullion, decreased
11.83 metric tonnes to 1,259.33 metric tonnes on January
14, according to figures on the company’s website.
Hedge-fund managers and other large speculators decreased
their net-long positions in New York gold futures in the
week ended January 11, according to US Commodity Futures
Trading Commission data.
Nevertheless, Gold is likely to reach $1,500
per ounce in the first quarter, and then may retreat if
the market expects central banks to exit quantitative easing,
according to Dong Tao, an economist at Credit Suisse Group
AG. In the long term, as inflation entered a new era, gold
might rise above $2,000 in the next 5 to 10 years, he said.