Gold prices advance to their best level since November 30th with a move to $1,190.6 for a high in today’s session. The contract for February 2017 settlement on the COMEX division of the New York Mercantile Exchange is currently at $1,187, up 0.49%. This follows a gain of 0.7% on Monday and a rise of 1.8% in last week’s trading.
Gold prices rose despite a modest advance in the dollar today. It appears that the precious metal is benefiting from increasing demand in China ahead of the Chinese Lunar New Year, on January 28.
However, over the near term, gold is vulnerable to a period of correction or consolidation, as the contract is heavily overbought according to the Stochastic, a price momentum indicator. In addition, Gold prices are nearing the next level of resistance at $1,200. This area of supply is likely to attract sellers.
On the downside, support is at the $1,160 level. A drop back below this level would negate the bullish implications of the recent price action and leave gold at risk for a return to the December lows.
In today’s economic news, wholesale inventories increased 1.0% month-over-month in November, slightly above consensus at +0.9%, following an upwardly revised 0.1% decline, from -0.4%, in October. Wholesale sales were up 0.4% following a downwardly revised 1.1% increase, from 1.4%, in October.