Gold Prices Euro, Gold prices rose Wednesday along with the dollar as the two resumed their safe haven status.Gold for April delivery added $10.40 to close at $1,728.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,739.20 and as low as $1,720.30 an ounce while the spot price was adding $6, according to Kitco’s gold index.
Silver prices were 4 cents higher at $33.39 an ounce while the U.S. dollar index was up 0.23% at $79.59.
It was a good day for gold with the metal closing up XX%. Gold first got a lift from a stronger euro after news broke that France’s economy grew 0.2% in the first quarter and 1.4% versus a year ago. The numbers surprised to the upside as did China’s announcement that it would continue to buy euro backed assets like bonds from the European Financial Stability Fund, temporary bailout fund, or European Stability Mechanism, permanent bailout fund.
The good vibe in the market faded as U.S industrial production was flat in January compared with a 0.4% gain the month before. Investors decided to focus on that, profit taking and the continued delay in Greece securing its second bailout. The U.S. dollar gained traction as investors ran out of stocks but so did gold as they both shined as safe havens.
“Gold faces further overhead technical resistance between $1,742-$1,763,” says James Moore,*n*lyst at FastMarkets.com. Moore also says that physical demand has been waning of late and it might drag the metal down to $1,700 an ounce.
Stan Dash, vice president of applied technical*n*lysis at TradeStation, thinks gold looks really good technically. “Gold has worked off its overbought conditions and remained positive.” Dash thinks gold will make it up to its recent high of $1,765 an ounce. “It probably needs to pick up some steam to really punch it but I think its set up to do that.”
Dash warns that gold prices may stall again at some point especially with traders gearing up for a long weekend in the U.S., but that within the next week gold could test those recent highs. “If we can get through these highs the next level is $1,805, but let’s take it one step at a time.”
“It looks to me like gold is just trying to form a real strong base to move higher,” argues Chuck Butler, president of EverBank World Markets. “I still think that gold is going to come back to at least its previous highs of last year … I really do think that gold is the anti-dollar if you will.”
Butler firmly believes that as long as the U.S. doesn’t have a balanced budget or rising interest rates then gold will be the de factor safe haven currency of choice. “The people who really buy gold look at it more vs. the dollar more than anything else.”
Butler thinks any signs of another quantitative easing program from the Federal Reserve will break gold out of its “slumber.” Many experts are looking for more bond buying between April and June, but others are more skeptical. Deutsche Bank thinks there is a good chance the unemployment rate could drop to 7.6% by year end strengthening the case for a rate hike in 2013. Also, weekly initial jobless claims have been falling steeply as low as 358,000 for the week ending February 4th, the lowest reading since April 2008.