Gold & Silver Report 12th Jan 2015

Gold broke a three-week decline ending the week up 2.5%. Issues in the Eurozone with the weakening currency and speculation over Greece leaving the Eurozone were supporting factors in the metal’s growth this week. Expectations that the US Fed is holding off on raising interest rates was also a supporting factor.

Price and charts snapshot:

On Monday gold prices rose, touching over the USD$1,200 (AUD$1,473.45) per ounce mark, gaining 1% from last week’s finish^[1]. The gains extended into Tuesday, with prices reaching 3-week highs in London of around USD$1,214 (AUD$1,490.64) per ounce, despite surges in the US dollar^[2]. Mid-week the metals declined again, with gold holding two days of losses on Thursday, weighed down by a stronger dollar and rising stock markets buoyed by expectations the Federal Reserve will be patient in raising interest rates^[3]. On Friday Gold ended the week with a modest gain as the US dollar and equities failed to react to the slightly better-than-forecast US jobs report , and as political uncertainty in Greece boosted demand for haven assets.

Despite the positive US economic figures and dollar, gold ended the week just below the 4-week high at USD$1,224.20^[4] (AUD$1,503.16). US crude oil, which fell below USD$50 (AUD$61.39) per barrel for the first time since 2009^[5], and events in Europe, may be sources of support for the precious metals. The Euro hit new 9-year lows, while Greece considers an exit from the Eurozone^[6]. Reuters reported “There is a bit of talk about safe-haven buying”, “given the spike in uncertainty regarding the future of the Eurozone.”^[7] The sentiment that the US Fed will not raise interest rates is another supporting factor.

Forecasts by Kitco News indicate that for gold, first resistance is the overnight high of USD$1,218.50 (AUD$1,496.17) and then this week’s high of USD$1,223.30 (AUD$1,502.06). While first support is the overnight low of USD$1,207.00 (AUD$1,482.05) and then this week’s low of USD$1,201.60 (AUD$1,475.41). For silver, the first resistance line was considered to be USD$16.50 (AUD$20.26) and then next at this week’s high of USD$16.74 (AUD$16.74). While the next support was set at the overnight low of USD$16.21 (AUD$19.90) and then at USD$16.00 (AUD$19.65).

In the coming week, key economic releases in the US to watch for include the retail sales data on Wednesday, jobless claims on Thursday and the Consumer Price Index on Friday. Industrial production numbers should also be reported by the end of the week.

Author Lisa Casagrande | https://www.goldbullionaustralia.com.au