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Gold Gains 2%, Yet May Face Downside Pressure

ByICN.com
Published 01/03/2014, 04:16 AM
Updated 07/09/2023, 06:31 AM

Precious-Gold climbed on Thursday, gaining around 2 percent, on some buying by investors after the drop in price to the lowest level in six months.
 
The remarkable drop in prices has encouraged some buying, yet the critical questions for how long would this buying continue amid the improvement in global data and after the Fed’s stimulus taper announcement.  
 
Data released today showed that European manufacturing remained unrevised at its highest in 31 months in December, while US ISM manufacturing widened expansion to 55.3 in December from 52.5 in November.  
 
Meanwhile, the yellow metal is trading around $1225.54 an ounce after hitting a high of $1228.40 and a low of $1203.13.
 
Now, the main support is around $1180 while the key resistance remains at $1270.
 
Last week, gold managed to retrace some of its losses, where it may succeed to end this week on another gain.
 
However, the shiny metal has recorded its first annual loss in 13 years in 2013 as the progress in global recovery dented the metal’s appeal as a safe haven.
 
Many analysts expect bearishness to continue this year after the announcement of the Fed which included tapering stimulus to zero by the end of next year.
 
Still, the effect of the stimulus withdrawal is not clear as markets are still not back to its normal level due to the year-start holidays; therefore, later in the month the real direction will take place.
 
The U.S. dollar rose against a basket of major currencies to hover around 80.78 after hitting a peak of 80.85.

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