Gold prices set to drop on US dollar pressure
New York (Mar 7) Gold prices are set to drop further next week, pulled down by a stronger US dollar, which has been buoyed by a strengthening US job market.
But traders did not rule out a minor technical bounce next week, as weak bullion prices could stimulate physical buying and attract bargain hunters to the marketplace.
George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures, told Kitco News he expects to see some weakness in the marketplace after the 6 March US jobs data but was looking for the $1,170 level to hold.
With that level clearly broken, Gero said prices could drop to $1,133, creating a technical double bottom, from the November 2014 lows.
Gero said the market could see a small technical bounce next week as some bargain hunters enter the marketplace but that any gains will be limited in the near-term.
Chris Vecchio, currency strategist at DailyFX, told Kitco that the US dollar was dominating the marketplace, hitting gold prices.
Vecchio added that he did not expect that to change much next week.
With the ECB launching its expanded stimulus programme on 9 March, and with the markets expecting the US Federal Reserve to be hawkish on 18 March, Vecchio said there was growing divergence among global interest rates, which was boosting the greenback.
Jeffrey Nichols, managing director of American Precious Metals Advisors (APMA) and senior economic advisor to Rosland Capital, said he will be tracking the market for any signs of strong physical buying.