Gold Prices Start Week On The Defensive
Toronto (Nov 3 ) Gold prices start the week on the defensive after hitting a four-year low on Friday and analysts are expecting the market to remain under pressure as the U.S. dollar continues to climb.
Electronic trading of Comex December gold futures opened the Sunday North American evening/Monday Asian session at $1,171.10 an ounce, just slightly up from Friday's pit close of $1,170.90 an ounce.
However, following the open, priced dropped to a session low of $1,161 an ounce, testing Friday’s low, and has remained near its lows since then. As of 8:48 p.m. EST, December gold was trading at $1,166.80.
Electronic trading of Comex December silver futures opened Sunday evening/Monday morning at $16.110 an ounce, slightly higher compared to Friday's pit close of $16.080 an ounce. Silver prices have underperformed gold prices since the start of the open; as of 8:48 p.m. EST, December silver was trading at $15.870 an ounce.
Adam Button, currency analyst at Forexlive.com, said that it will be difficult for gold to find any momentum in the short term as the U.S. dollar dominates the marketplace. He added the U.S. dollar's strength is understandable as the other major global economies, Europe and Japan, remain weak.
“We are at the point where everyone wants to pile into the U.S. dollar,” he said. “Nobody wants to bet against it.”
Because of the U.S. dollar momentum, Button said that he is expecting gold to push a lot lower in the near term.
“Right now there are only two trades in gold, short and on the sidelines,” he said. “Gold needs some sort of catalyst and I just don’t see what that could be.”
Commodity analysts at HSBC agreed that U.S. dollar strength will continue to drag gold prices lower in the near term.
“We have maintained that in the current down cycle for gold, USD strength is the prime reason for bullion weakness,” the analysts wrote in a research note on Friday.