Yellow metal may add more glitter

The short-term picture for gold is turning more bullish and a strong close on Friday would see a move above the $1,900-an-ounce range in the coming days, say market analysts. Gold jumped 2.6 per cent on Friday, the most in almost four weeks, after a report showed that US employment stagnated in August. Gold’s strong showing is prompting many market watchers to say they expect prices to rise next week. But they caution that prices could be volatile. Next week is a shortened trading week in the US, with markets closed on Monday for the Labor Day holiday.

Gold futures for December delivery gained 4.4 per cent during the week, to close at $1,876.90 on the Comex in New York. The Gold December futures settled higher at $1,886.70 in late trading on Friday. Gold has jumped 32 per cent this year, heading for an 11th straight annual gain. In the Kitco News Gold Survey, of the 25 participants, 20 saw prices up, while two saw prices down, and three saw prices sideways or unchanged. Market participants included bullion dealers, investment banks, futures traders and technical chart analysts.

The weekly market picture (MKTP) chart sourced from Bloomberg hinted at a price level of $1,933 on the upside and lower-end support at $1,825. The December futures saw volume-based buying around $1,850 on Friday, mostly in the form of short-covering on the report that the US unemployment rate remained at 9.1 per cent and payrolls were unchanged in August. The short-covering lifted the sentiment and the December gold moved up strongly, after hovering around $1,820-1,830 in the day session.

The trade summary matrix suggested sell-side bias, but short-covering, when the December futures started trading above $1,850. It was a net buying day on Friday, with only 24 per cent TPO (time-price opportunity) counts were above the point of control (PoC-1,876-1,878). This clearly means gold may open on a strong note on Monday and prices are expected to move up above $1,900 during the course of the day. The MKTP showed TPO- and volume-based upside at around $1,927 and strong support below $1,830. There was no significant volume in the call and put options, as participants were wary of either side positions.