Prices expected to face resistance at $1,450

Gold futures for April delivery reached a record $1,441 an ounce last week and settled at $1,428.60 on the Comex owing to mounting tensions in Libya. Gold rose 1.4 per cent last week and climbed for the sixth straight week, its longest rally since September 2007. Gold’s rally into the end of the week and continued unrest in North Africa and West Asia is expected to give precious metals a firm start for next week’s trading. People wanted to be longon gold and silver, going into a weekend where there was lot of macro risk in the market, said Adam Klopfenstein, senior strategist at Lind-Waldock, Chicago.

Gold is likely to move up afresh, suggests the trading pattern in April futures and open interest build-up at call and put options. Technically, prices are expected to face resistance at $1,450 and support below $1,400. Friday’s MKTP chart for April futures hints at a new high of $1,453, with strong support around $1,400. Gold may not go substantially below $1,415 next week as almost 90 per cent volume was above that level last week. April futures completed 100 per cent retracement at 1,441, as against a low of 1,309 on January 28. If the rally persists, gold can achieve 123.6 per cent retracement at 1,486.83.

Call buyers expect gold to cross $1,450 as they sold significant long positions at that level in the last two trading sessions. Buy-side trade was seen in the 1,430-1,440 strike call options, trade summary matrix for the week-ended March 5 suggests. Traders also covered short positions in the 1,460 strike call options in the last two sessions. There was put-writing at $1,415 and change of hands at 1,420 strike put options as participants expect gold to stay above this level in the near future.

Gold holdings in SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, remained unchanged last week, according to figures on the company’s website. Hedge-fund managers and other large speculators increased their net-long position in New York gold futures for the week-ended March 1, according to US Commodity Futures Trading Commission data. Net long positions rose by 16,829 contracts, or nine percent, from a week earlier.