Gold short-term outlook still remains bullish

Gold and silver continued to advance to record levels at the end of last week, as a weaker dollar and lingering concerns over the global economic recovery encouraged investors to seek the safety of precious metals. With the dollar regaining some ground against the euro, gold and silver have since lost support. That said, with the current euro weakness largely attributable to the resurfacing of concerns over the stability of Eurozone banks, these fears may well see demand for precious metals continue to pick up heading into the week.

Of interest, Central Bank gold sales have plunged, with the Year-ending September 14th seeing gold sales from the IMF and Eurozone banks - under the Central Bank Gold Agreement falling 40% to 94.5 mt. Eurozone sales for the year fell by 96% y-oy to only 6.2 tonnes, with IMF sales making up the balance at 88.3 tonnes. While falling sales are nothing new, the figures are interesting nevertheless with the lack of sales marking a change in the central bank’s mindset towards gold.

After last week’s holiday, Chinese interest in gold is muted. Gold support is at $1,292 and $1,287. Resistance is at $1,302 and $1,305. Fatigue might also be creeping into the silver market, however, the short-term outlook still remains bullish.

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