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Gold Futures Inch To Lower End Of Narrow Range As Crude Oil Suffers

(Kitco News) - Gold futures remain in a narrow range but nevertheless have inched down to their lowest level in more than a week largely due to weakness in crude oil futures and also as the dollar index edges higher, analysts said.

As of 7:56 a.m. EST, Comex February gold was 80 cents softer at $1,067.20 an ounce. Still, while the yellow metal has been in a range of only $6.30 for the day so far, has traded as far south as $1,065.20, its lowest level since Dec. 21. March silver was down 7.8 cents to $13.850.

“The price of oil fell back down,” said Phil Flynn, senior market analyst with Price Futures Group. “It’s raising those deflationary concerns again.”

Nymex February crude oil was down 95 cents to $36.92 a barrel. Against this backdrop, gold is having a hard time attracting flows as an inflation hedge, Flynn explained.

Additionally, he added, gains in the dollar index are holding back the yellow metal. The March dollar index was up 0.167 point to 98.340.

Still, while trending toward the lower end of its range for the week, gold has chopped around in a band of less than $12 since Christmas.

“Gold is likely to remain in thin choppy trading ahead of the New Year,” said Jim Steel, analyst with HSBC.

Gold probably will end the year somewhere between $1,060 and $1,085, said Alex Thorndike, senior precious metals dealer with MKS (Switzerland) SA.

“We are still cautious of choppy and illiquid conditions as there is very little depth in this market at present and could be subject to being pushed around,” he said. “We suspect we will see an accumulation of interest next week with January historically being generally a positive month for gold. So for now we look to buy dips.”

Technically, major chart support for Comex gold is the double-bottom so far this month at the Dec. 17 low of $1,046.80 an ounce and the Dec. 3 low of $1,045.40. The market has edged below the 10-day average of $1,068.60 and 20-day average of $1,068.40, although so far the selling has not accelerated.

Resistance lies at the Dec. 4 high of $1,088.30. The 50-day average lies at $1,091.90, with the 100- and 200-day averages well above this.

For March silver, major support lies around the Dec. 14-15 lows of $13.62 and $13.635. The market is below the 10-day moving average of $14.083 and the 20-day of $14.066.

Resistance is seen at the Dec. 7 high for the month of $14.64.The 50-day moving average lies at $14.541.

By Allen Sykora of Kitco News; asykora@kitco.com

 

 

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