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Gold Consolidates Above $1100

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Gold Consolidates Above $1100
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Gold held on to most of last week's gains, trading as high as $1,108 a few times overnight. Bulls are digesting last week's big gains, staying between Friday's spot close of $1,104 and $1,110. A non-farm payrolls report that came in far above even the most optimistic forecasts was not enough to keep gold under $1,110 Friday, suggesting that, at least for the short term, this will be a firm support level.

We're looking for support at the $1,098 level, then $1,088. First resistance should be $1,108, then $1,113.

Friday's Numbers For Gold

The February futures contract on the COMEX closed Friday at $1,097.90, snapping a four-day winning streak. This was $9.90 (0.9%) lower than the Thursday close. However, gold futures were up 3.6% for the week, the best showing since last August 21.

Spot gold closed at $1,104.60, down $4.60 (0.41%.) The daily high was $1,107.00 and the low was $1,092.20. Seeing how gold had risen $32 an ounce the previous two days, the market was due for some consolidation and a little profit-taking.

The Week In Review

Stock Market losses first week of January Wall St Journal

Stocks closed for the worst "first week of the new year" EVER, driven by the rout in Chinese stocks. The Dow lost over 1,000 points for the week, ending down 6.2%. The S&P 500 was down 6% for the week, and the Nasdaq was down 7.3% Chinese markets were down 10% for the week. Global stocks lost $2.3 trillion in value last week.

Crude oil futures slid 10% for the week, but analysts at Goldman Sachs say that isn't enough. Industrial metals also continued their slide. The dollar saw an eight-day rally snap on Thursday, when it experienced its steepest one-day drop since December 9th.

Today's Action

The dollar is flat this morning, as the euro is supported by rumors that the European Central Bank may soon be forced into more stimulus measures. On Wall St., stocks opened higher, but soon fell to unchanged. Prices are slightly higher in volatile trading, as sellers are met by bargain hunters.

UPDATE: Gold was hit by heavy selling pressure shortly after 10am, which may be profit-taking, or bears seeking break the new $1,100 trendline. A recovery back above $1,100 (ideally, above $1,104) would serve to solidify recent rapid gains.

About the Author

Everett Millman

Steven Cochran

Precious Metals Market Analyst
BS University of South Florida (2002)

A published writer, Steven's coverage of precious metals goes beyond the daily news to explain how ancillary factors affect the market.

Steven specializes in market analysis with an emphasis on stocks, corporate bonds, and government debt. He writes a monthly review of the precious metals markets for SurvivalBlog.com.

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