Dubai, Looming fears of a Greek default, a general Euro Zone slowdown coupled with policy stalemate and absence of signs of fresh quantitative easing in United States are all conspiring against gold price, with yellow metal down more than $115 in seven days since last Wednesday, February 29, 2012.
Spot gold prices were $1,672.90 per ounce at 11.10am UAE time (7.10am GMT) today (Wednesday, March 7, 2012), down 6.5 per cent from $1,790 that an ounce of gold fetched last Wednesday, Emirates 24-7 reported.
A surge in US dollar is adding to downward momentum in precious metals, and Eurozone debt crisis concerns are once again weighing on investor minds, with tomorrow s deadline looming for private sector involvement agreement.
Greek Finance Minister further rattled markets by taking a hard line and saying that existing offer is only offer that the government will consider, and that he stands ready to trigger collective action clause which would force all bondholders to accept the deal.
Gold fell 2 per cent in yesterday s session its steepest daily fall this year while silver tanked 3.5 per cent to $32.78 an ounce, and is currently trading at $32.84 an ounce (11.10am UAE time). Asian jewellers were seen entering the market once again at these attractive prices, buoying up physical buying in international counters.
In gold physical market, activity is brisk. Strong buying is providing support at $1,695 level. Our Standard Bank Gold Physical Flow Index has pushed considerably higher this week so far (to levels last seen at beginning of February), indicating that as a whole, physical market participants are net buyers and increasingly so, said Standard Bank precious metals analyst Marc Ground in his daily report.
Nevertheless, despite fresh physical buying support, analysts believe that yellow metal has some way to fall before real physical demand and bargain buying props up prices once again. February to June is typically a period where physical demand is weak (relative to rest of year). As a result, we believe that waning physical demand over the medium term could translate into a support level closer to $1,650, Ground said.
With gold prices closing yesterday at $1,671.40 per ounce on the Comex, technically speaking, gold prices have now broken key support levels of $1,688 (its 50-day moving average) and even $1,674 (its 200-day moving average), suggesting that gold may, pretty quickly, drop to the next big support levels: $1,650 per ounce and then $1,600/oz.
