Gold remained locked in the midst of its current range although prices backpedalled as the dollar rose against the euro and resistance again went unchallenged, traders said on Monday morning.
”Gold remains locked in its $316/322 range despite continued equity weakness. In light of the still-long speculators, we continue to expect more consolidation,” UBS Warburg analyst John Reade said in a report.
The European market lacked energy during the morning’s trade and spot gold struggled to get a real foothold above $318 an ounce as the dollar rose just above 17-month lows against the euro and investor interest in the precious metal continued to wane.
With World Cup football action capturing the interest of London dealers, gold was bid at $318.15/318.65 by 1018 GMT, down on its opening levels of 4318.50/319.00 and off from $319.15/319.65 at Friday’s close of business in New York.
”The market has just stopped. It’s moved a whisker and that’s it. To be honest, most of us are more concerned with the football,” one trader said.
A weakening dollar, jittery stock markets and geopolitical tensions have helped carry gold to a 2-1/2 year high. However, since then progress on the 17 percent rally this year has been slow because the market is overbought and investors have raced to cash in on the high prices.
Although the general market consensus is that bullion looks set to trend lower in the near term, many players couldn’t agree on how far prices would fall.
”Prices at this stage lack the momentum for a new high. Basically, $323 has to be taken out again in the next 24 hours, or a move above through $316 will not only see a decline to $300 but potentially to $287,” J.P. Morgan Securities said.
A trader added: ”I think it could drop another $2 today, but I think it will hold support at $316. Although it has good long term potential, it lack direction at the moment.”
Silver was little changed all morning, with prices at $4.83/4.85 only two cents lower than Friday’s close of business in New York.
With the market still eyeing dollar/yen movements for price direction, platinum moved to $558.00/563.00 against $558.00/565.00 in New York, while palladium was at $329.00/337.00, from $328.75/343.75 previously. – Reuters