Gold Prices Consolidate, Policy Uncertainties Curb Activity

Gold found support from a firmer Euro trend and slight decline in US bond yields, although the main feature was uncertainty ahead of key events this week, especially with important doubts surrounding US Treasury policies.

Late in the European session on Friday, there were reports from ECB sources that the central bank had discussed the possibility of raising interest rates before the bond-purchase programme had been completed.

The reports put fresh upward pressure on the Euro with significant gains on the main crosses with a notable move against Sterling and the Swiss franc. The dollar was also unable to make further headway against major currencies with a strong employment report already priced in.

US yields also retreated from their highest level with 10-year yields dipping back below the 2.60% level which also curbed potential selling pressure on precious metals.

Overall, gold continued to find support below the $1,200 level and consolidated just below $1,205 into the US close.

The latest COT data recorded a decline in long, speculative gold positions to 133,685 contracts in the latest week from 163,798 the previous week with the data suggesting gold’s failure to hold above $1,250 triggering a fresh round of liquidation.

The dollar was unable to gain any significant traction in Asia which pushed gold to highs just above $1,210, Concerns over the US stance at this week’s G20 meetings were significant in curbing dollar support, but equity markets were robust which lessened any potential defensive dollar demand.

Fresh selling pressure emerged as the Euro was unable to make further headway and US yields also ticked higher.

There were no significant economic data releases in Europe and trading conditions were also relatively lacklustre at the US open which is often the case on the Monday after US employment data. There was no reaction to the latest round of firm US labour-market data.

Overall, there is likely to be consolidation ahead of Wednesday’s key economic data and Federal Reserve policy statement with a reluctance to engage in aggressive positioning.

Gold prices 4-hour chart


Tim is a contributing author to He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.