The spot price of gold fell to an overnight low of $1,714.73 per ounce

The gold price bounced back from earlier losses on Monday alongside the broader financial markets.  The spot price of gold fell to an overnight low of $1,714.73 per ounce, but later climbed back into positive territory by $4.63 at $1,727.12.  However, following last week’s 1.8% decline, the gold price remained near the lower end of the range it has occupied since early September.

In a note to clients, Credit Suisse analyst Tom Kendall wrote that “The (gold) market was very long up at around $1,800 and we’ve seen some of the length being unwound.  I suspect more will be reducing positions and a lack of any tremendous desire to buy at this level.  The path of least resistance is still lower.”

Kendall went on to say that “The market is looking for a pickup in demand from physical players in India.  It would provide support but generally speaking, given what we’ve seen so far in India I’m not sure you would expect buying on a scale that would drive the price much higher.”

Looking ahead to this week, all eyes will be on the Federal Reserve and Chairman Ben Bernanke on Wednesday as the U.S. central bank holds it first Federal Open Market Committee (FOMC) meeting since launching its open-ended third round of quantitative easing (QE3) in September.  While the Fed is not expected to alter the size or structure of QE3, its outlook for the U.S. economy and monetary policy are likely to be important catalysts for financial markets in general and gold prices in particular.

In addition to the Fed meeting, New Home Sales will be announced on Wednesday, followed by weekly Jobless Claims, Durable Goods and Pending Home Sales on Thursday.  The economic data will then conclude on Friday with third quarter U.S. GDP and the University of Michigan Consumer Sentiment Index.

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