US Gold futures trade in $1420-60 range,weakness may continue
The fall in holdings in exchange traded funds and rising short positions in US futures continue to cause concern for the yellow metal's prospects. Holdings in exchange-traded products backed by bullion dropped to 2,225.9 metric tons yesterday, the least since July 2011.
US Gold futures has rebounded on Tuesday due to a softer dollar after showing weakness in the past few days. US futures for June delivery closed at $1434.3/Oz on Monday and in globex platform gold is now traidng at $1437.7 �after hititng a high of $1444.9/Oz.
On technical charts, gold continues to be in bearish territory but not in oversold position and RSI of 42.29 indicates move towards neutral territoryu while prices are more closer to the lower bollinger band of $1385.20, Sreekumar Raghavan, Chief Strategist at Commodity Online said.
The dollar has rallied 4.1 percent against a six-currency basket including the yen and the euro this year as data showed the U.S. economy strengthening, while the Bank of Japan undertook unprecedented stimulus and the European Central Bank cut interest rates to a record. Gold has dropped 14 percent this year after 12 straight years of gains as some investors lost faith in the metal as a store of value, Bloomberg reported.
The fall in holdings in exchange traded funds and rising short positions in US futures continue to cause concern for the yellow metal's prospects. Holdings in exchange-traded products backed by bullion dropped to 2,225.9 metric tons yesterday, the least since July 2011.
In a recap of the gold market on Monday, CME Group report said that market avoided a sharp downside extension on Monday after showing initial signs of vulnerability."Ongoing pressure from the Dollar seemed to abate slightly today as the US currency wasn't able to forge a fresh upside breakout, despite talk that the US Fed might be planning its QE exodus. In fact, gold prices could have come under significant pressure today in the wake of weekend talk about the unwinding of US easing measures. Ongoing long liquidation signs from the COT report and from gold derivative holdings would seem to leave the investment outlook for gold suspect. It also seemed as if the Indian government has continued to discourage investment in gold, as new rules have made it more difficult to finance gold bar transactions, unless the bars are being purchased by jewelry dealers and that in turn might make it more difficult for speculation in gold by Indian bullion dealers."
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