Gold Holds Key Support After 2 Million Ounces Dumped Late Wednesday
(Kitco News)- Selling pressure in gold picked up late in Wednesday’strading session as the U.S. dollar found some new momentum and equities see itsbest day in more than a month.
Within a 30-minute period, more than 2 million ounceswere sold, pushing Comex gold futures prices to session lows. However, themarket continues to hold critical support levels, according to some analysts.February Gold last traded at $1,328.80 an ounce, down0.61% on the day. At the same time, the U.S. Dollar Index has moved moderatelyhigher off its three-year lows, last trading at 90.65, up 0.26% on the day.
Equity markets, which have seen consistent gainsthroughout the session, ending the day at new record highs. The S&P 500Index settled the day up 26 points to 2,802, up almost 1% on the day.
Gold’s drop does not come as a major surprise to someanalysts, who have been expecting to see some consolidation after the yellowmetal hit a four-month high at the start of the week.
Phillip Streible, senior market strategist at RJOFutures, said that gold’s technical outlook remains bullish as long as prices holdnear-term support at $1,320 an ounce, which represents a critical psychologicallevel.
Along with a stronger U.S. dollar, Streible added thatbitcoin could be taking some luster away from gold. While bitcoin has fallensharply from record highs only one month ago, he noted that the market has heldan important retracement level.
Bitcoin is down almost 45% from its record highs seen inmid-December; but, the digital currency has bounced off its lows and has pushedback above $10,000. Kitco.com aggregated charts show bitcoin last traded around$10,800 per token.
“Bitcoin has held the important 50% retracement level sosome investors might be selling their gold and buying bitcoin as they see valueat these levels,” he said.
Bill Baruch, president of Blue Line Futures, said in anote to clients that a pullback in gold to $1,327 an ounce would be healthy.However, he also added that a close below $1,335 could signal that it is timeto take some profits off the table.
Lukman Otunuga, research analyst at FXTM, saidthat the gold market is showing signs of early exhaustion but the uptrendremains in place if the market can hold support at $1,325 an ounce.
By Kitco NewsFor Kitco News
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