Gold Price May Drop More

















Gold is directionless this morning, range-trading between $1,097 and $1,091, after a stronger US dollar weighed on precious metals in New York trade yesterday. Open interest on the February 2010 COMEX gold future decreased by 9,808 contracts yesterday—which also weighed on gold market sentiment. In spite of that however, the retracement in the gold price did appeared
to attract new ETF inflows. Of note, the SPDR Gold Trust ETF, the biggest gold-backed ETF, increased its gold investment holdings by 215,171oz . Gold support and resistance are at $1,083 and $1,110, respectively, today. Gold has remained strongly correlated to the US dollar this morning, with the rolling correlation (on a 5-day basis) between the spot gold price and trade-weighted US dollar increasing from -0.88 yesterday, to -0.94 this morning.

Yesterday US Q3:09 GDP and existing home sales data had impact on gold prices in NY trade, particularly the data had impacts significantly on the strength of the dollar.

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