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Gold Shoots Higher In Thin Trade From Six-Month Lows

ByICN.com
Published 01/02/2014, 04:28 AM
Updated 07/09/2023, 06:31 AM
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Gold prices jumped early Thursday, posting its biggest intraday gain in more than three weeks as traders took advantage of low prices after it slumped to the lowest in the lowest in six months.

The bullion market welcomed the New Year on a higher note apparently, with gold up nearly 2% hitting the highest level in ten days at $1,229.95 an ounce, compared with the day`s open at $1,205.90. Meanwhile, the trade remains rangebound and more like thin as traders cautiously anticipate the gold`s next direction after it lost more than a quarter of its value last year.

The Federal Reserve’s $85 billion in monthly bond purchases, which was the main reason the behind the gold fever from December 2008 to June 2011, will be finally curbed by $10 billion this month.

Gold suffered a rude shock in 2013, with gold losing more than a quarter of its value in the worst annual free-fall over 30 years. However, the prospects for a strong rebound in 2014 are out of the consensus forecast.

Therefore, many analysts expect gold free-fall is not over yet this year, but Chinese demand will probably cushion prices from slamming into much lower grounds. Yet, the bearish outlook for the precious metal remains evident in the meantime.

The momentum sounded more upbeat if we look at stocks; the Dow ended 2013 at a new record high of 16,576. However, Treasuries were badly hit by prospect of Fed tapering, with the 10-year yield nearly doubling from 1.70% to 3.03%.

Technically, the break above $1,220 resistance level might be shortly lived, but we would like to confirm a daily closing above that level.

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