Analyst say it could hit last week’s low following Fed concerns
San Francisco, CA -- (SBWIRE) -- 01/11/2013 -- Gold had a lackluster showing following the equally poor U.S. Jobs data, as the latter supported the expectations that monetary easing from the Federal Reserve would continue. A session after concerns of the withdrawal of such policy drove the bullion to its lowest point in the last four months.
The unemployment rate was noted as holding steady at 7.8% in December. Though U.S. Employers are keeping on pace with hiring, which suggests a meek but notable improvement of the labor market.
Gold dropped to a four-month low of $1,625.79 on Friday. The slip immediately followed news from the Fed's last meeting showing officials are increasingly concerned about the use of “quantitative easing” on financial markets.
The news clearly had a residual effect on investors who expected the central bank to continue to throw money at the market.
"There is still hope for gold," said a Sydney-based trader. "I'm much less sanguine about the state of the US economy, as some of the leading indicators are suggestive of a slowdown in US payrolls growth and a stalling in the drop in the unemployment rate."
Maintaining of the monetary stimulus of the Fed will have to be the result of the meeting, according to the trader. That will help gold remain attractive to investors who are concerned with cash printing by the central bank fueling inflation.
Spot gold inched up 0.3% to $1,661.54 per ounce, following a fall for two consecutive sessions and ending last week with minimal change.
U.S. Gold gained a 0.8% mark to $1,662.10.
Technical analysis was far less positive. Spot gold is likely to revisit last week's low of $1,625.79, as indicated by the wave pattern and Fibonacci ratio analysis, according to Reuters Market analyst Wang Tao.
"We think gold still has a chance of breaking above $1,800 and even reach $1,900 in the first half of the year due to fragile economic recovery in the United States and easing policies by central banks," said Li Ning, an analyst at Shanghai CIFCO Futures.
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