Gold is currently in a protracted period of consolidation and expecting a break-out. Technically it is unclear which way the market could go – but fundamentally it looks likely that a sharp move to the upside is a distinctly possibility based upon rising economic tensions in Europe.
Proving for the nth time that what happens in China is a pivotal impact factor to the commodities’ space, the most recent developments in that country sent base and precious metals prices, along with most global equity markets, lower overnight.
Data internationally shows that demand for gold bullion bars and coins remained robust in 2011 and into January 2012. But this remains a fringe activity of store-of-value buyers rather than a mainstream phenomenon.
The midweek session in New York opened and then continued with further spot price losses being recorded in the precious metals complex. Gold bullion dropped some $18 to near $1,363 per ounce and broke a pivotal support on the technical charts.
The yellow metal opened with a $3.10 per ounce gain just ahead of release of US new home sales and durable goods orders data amid by now 'normal' amount of apprehension exhibited since the last Fed meeting.