Gold Drops ‘Clean Through Support’

Gold Price Drops ‘Clean Through Support’ as Precious ETFs Shrink, US Jobs Hit Forecast

Bullion.Directory precious metals analysis 04 November, 2015
By Adrian Ash
Head of Research at Bullion Vault

Latest US trade data were also better than expected, showing the smallest September deficit between imports and exports since 2012 at $40.8 billion.

The Dollar jumped to new 3-month highs versus the Euro on the currency market.

Erasing the last of October’s 6.8% gain on Tuesday, the Dollar gold price today dipped further below $1115 per ounce – a new 5.5-year low when first seen in July.

“A move below $1155-1145 in gold,” said French investment and bullion bank Societe Generale in a technical analysis of chart patterns a week ago, “will confirm possibility of a deeper retracement initially towards $1133 and probably even towards $1120, the lower limit of the daily upward channel.”

“Major support now lies at $1118,” agreed a trading desk note from Swiss refining and finance group MKS yesterday, pointing to the “uptrend since July 20 collapse.”

Gold’s “recent descent is expected to end in the $1131-1122.50 region,” added Commerzbank’s Axel Rudolph in the German bank’s Weekly Technicals report Tuesday.

“We thought the 61.8% Fibo level at $1121 would offer support but the metal went clean through it,” says Canadian bullion bank and London market maker Scotia Mocatta’s daily technical analysis.

“Next support comes in at the October low of $1105 and September low of $1100. Sellers will be looking to fade any bounce to $1134.”

Silver meantime tracked the falling gold price Wednesday, setting fresh 4-week lows of its own beneath $15.20 per ounce.

Silver holdings needed to back the iShares Silver Trust (NYSEArca:SLV) shrank again Tuesday as shareholders liquidated stock, extending the 3-year low in global exchange-traded inventories.

Palladium prices had meantime rallied earlier today from new 6-week lows, hit Tuesday as ETF outflows also accelerated according to the specialist Platts news and data agency.

Platinum prices rallied from 4-week lows, but during October, says Japanese conglomerate Mitsubishi’s analyst Jonathan Butler, ETF trust funds holding the metal – primarily used in auto-catalysts for diesel engine vehicles – “saw the heaviest monthly liquidations of the year to date, primarily due to profit taking in the South African funds which reversed the recent net inflows to those products.”

Gold bullion holdings in the giant SPDR Gold Trust (NYSEArca:GLD) shrank another 3 tonnes yesterday, closing at the smallest level in 5 weeks at 686 tonnes – less than 3% above late-July’s new 8-year lows.

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