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Most Analysts Expect Gold To Stabilize During Quiet Holiday Period

By Neils Christensen of Kitco News
Friday, December 19, 2014 2:53 PM

(Kitco News) - With everyone now focused on the holidays, most analysts are not expecting to see any major movement in the gold price in the next two weeks.

The trading week in North America will be disrupted as markets are closed on Dec. 25 for Christmas and January 1 for New Year’s Day. Analysts said that liquidity will be extremely leaving most market participants will sitting on the sideline, waiting for activity to pick up in 2015.

Friday, Comex February gold prices settled the week at $1,196 an ounce, down about $26 on the week. Comex March silver prices have settled the week at $16.030, down 99.5 cents on the week.

However, analysts have noted that gold has held up considerably well following the Federal Open Market Committee Meeting, after the Fed said that they don’t anticipate raising rates for at least two meetings.

Colin Cieszynski, senior market analyst at CMC Markets, said that the gold market appears to have stabilized around $1,200 an ounce and could remain around these current levels, until at least the first or second week into the new year.

Cieszynski added that after increased volatility at the start of the month, investors will be happy to step away and take a much needed break.

“I just don’t see too many people wanting to make waves in the next two weeks,” he said. “Even crude oil seems to be stabilizing with [West Texas Intermediate] hovering around $55 a barrel.”

Just ahead of the Christmas break, the U.S. Department of Commerce will release the final estimate for fourth-quarter gross domestic product, however, Julian Jessop, head of commodity strategy at Capital Economics, said that this is the final reading and won’t really shed any new light on the current condition of the U.S. economy.

“We already know that the U.S. economy is strong and the data isn’t going to change anything,” he said.

Economists at CIBC World Markets said markets will receive important manufacturing data from the Institute of Supply Management, but they also said that the impact would be limited.

“Overall, we don’t see anything in the next two weeks to take away from the holiday cheer we’re feeling about U.S. prospects these days,” they said in a Friday research note.

Of course, the week won’t be without its hurdles. Jessop said that gold prices could destabilize over the holidays if the Russian economy surprisingly deteriorates, or if there is more volatility in oil prices.

Avi Gilburt, independent trader at ElliotWavTrader.net, said that he is not convinced that markets will be quiet over the holiday period. He added that metals are in “no man’s land” and could be poised to move significantly lower.

“The setup is there right now and if anything is going to happen, it will in the next couple of weeks,” he said. “I don’t think the market has found a bottom just yet,” he said.

Looking at the world’s biggest gold-backed exchange-traded Fund (NYSE: GLD), Gilburt said that if near-term support levels are broken, GLD could end up at $105, “and that could happen pretty quickly.”

Gilburt added that although the setup for lower prices is in place, he hasn’t seen any strong validation signals just yet. However, there is a chance that gold could end the year similarly to 2013, when gold prices lost almost $80 an ounce in the last few days of the year.

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By Neils Christensen of Kitco News; nchristensen@kitco.com


Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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