Gold futures for December delivery closed on a weak note on Friday, on better-than-expected US job data and profit-booking by some investors to cover the losses in other markets. Gold fell $7.20 or 0.4 per cent, to settle at $1,651.80 on the Comex in New York.
Investors are eagerly waiting for Fed to pronounce its growth outlook for the coming months, next week. If it modifies its forecast for domestic growth, or predicts an increase in price pressures, gold may remain an attractive hedge against a possible slowdown in the US.
As the worries about the US economy and debt levels continue, gold may extend its recent gains next week. Nevertheless, there is a possibility for a technical correction or profit-taking, after such a sharp run-up in recent times. Technically, gold has support at $1,645 — 61.8 per cent Fibonacci extension taken from the January and July troughs.
A break here will provide subsequent floors at the 50 per cent extension to $1615 and $1,580. Interim topside resistance was seen at $1,665, backed by the all-time high of $1680 and $1,700 mark, recently.
On Friday, the futures saw volume-based selling, which pulled down gold from the day’s high of $1,672 to $1,650 an ounce. Gold closed in a Doji pattern, with a long upper shadow, indicating the presence of sellers.
It closed on a bearish Harami on Thursday, indicating a bearish trend in the future. The market picture chart hinted at an upside resistance above $1,680 and a volume-based sell-off around $1,630, which is also 50 per cent Fibonacci retracement from the recent high of $1,684, from $1,580. The 76.4 per cent Fibonacci retracement is placed at $1,607.
Several traders and analysts said economic and deficit worries meant gold will remain a favourite among traders and investors. Mike Daly, gold and silver specialist with PFGBEST, said gold is only $30 away from its record high, despite big sell-offs in other markets over the last two days.
Ira Epstein said gold could advance towards the $1,800 mark by the year-end, but some sideways action is likely, since the markets collectively have factored in enough negative news that tend to support gold.