Gold Stages Impressive Rebound on Short Covering,

 

Gold Stages Impressive Rebound on Short Covering,

The gold market is posting an impressive price rebound in late-morning trading Friday. After hitting a fresh two-week low in the wake of a stronger-than-expected U.S. jobs report, a wave of short covering and bargain-hunting buying interest hit the gold market to drive prices well above unchanged. The fact that gold prices have been able to rally in the face of the bearish U.S. jobs report and amid a very strong U.S. dollar index Friday morning is very encouraging, from the bulls' point of view.

Also, gold prices dropped down to challenge strong technical support at the February low, but did not push below it, and then rebounded. That's another bullish clue that a market bottom is in place, or close at hand. A close above unchanged levels on Friday would give the bulls some confidence that a near-term market bottom is indeed in place. A  technically bullish weekly high close in gold prices on Friday would provide the bulls with better confidence the market has put in a near-term low. April Comex gold last traded up $5.00 an ounce at $1,580.00.

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Gold tilts up, aims to extend rise to a third day

Gold futures tilted higher Wednesday,

 aiming to extend their rise to a third straight session, as investors weighed the metal’s safe-haven appeal against a backdrop of better-than-expected U.S. private-sector employment data and a drop in factory orders.

The market also garnered support ahead of Thursday’s decisions on monetary policy by the European Central Bank and Bank of England and Friday’s official U.S. nonfarm payrolls report.

Gold for delivery in April GCJ3 +0.23% traded at $1.578.60 an ounce on the Comex division of the New York Mercantile Exchange, up $3.70, or 0.2%. It stuck to a range between $1,566.40 and $1,584.30.

Prices tallied a modest gain of $2.60 over the past two trading sessions.

May silver SIK3 +0.98%  also rose 29 cents, or 1%, to $28.90 an ounce.

The massive quantitative-easing policies of the U.S. “look to be spreading around the world (think England, Japan), which should typically propel gold prices,” said Jason Rotman, president of Lido Isle Advisors in Newport Beach, Calif.

“However, with strong U.S. economic data recently hitting the wires, including [Wednesday’s] ADP jobs numbers, we also see a move away from safety (gold, bonds) and into risk-based assets such as equities,” he said. 

The Dow Jones Industrial Average DJIA +0.18%  closed at an all-time high on Tuesday. See: U.S. stock rally lifts Dow to record high.

Data from Automatic Data Processing Inc. Wednesday showed that U.S. private-sector jobs rose by 198,000 in February, more than economists expected. See: Private-sector jobs growth beats expectations.

 

Factory orders in January, meanwhile, fell 2%, though economists surveyed by MarketWatch expected orders to decline by 2.2%. See: U.S. factory orders drop 2.0% in January.

The Federal Reserve’s Beige Book, which was set for release at 2 p.m. Eastern — after the Comex session ends — is expected to show the economy limped along in early 2013. 

But for now, the gold market is looking forward to the Bank of England meeting, “and perhaps anticipating more stimulus, which would typically be bullish for gold prices,” said Rotman. 

Stimulus is typically tied to inflation and gold is seen as a hedge against inflation. 

On the downside for gold prices Wednesday, the dollar edged higher against many of its rivals.  The ICE dollar index DXY +0.49% , which measures the greenback against a basket of six currencies, rose to 82.390 from 82.078 in late North American trading on Tuesday. Dollar strength weighs on dollar-denominated commodities such as gold since it makes them more expensive for holders of other currencies.

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Gold Survey: Split Views On Gold Price Direction Seen In Gold Survey

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There is no clear majority on the direction of gold prices for next week, as survey participants in the weekly World News Gold Survey differ in their view of where the yellow metal’s price might travel.

In the World News Gold Survey, out of 33 participants, 29 responded this week. Of those 29 participants, 13 see prices up, while eight see prices down, and eight see prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Those who see higher prices said gold could be forming a potential bottom around the $1,550s, which if it holds, could portend higher prices. Others cited physical buying and the continued underlying support of ultra-loose central bank monetary as supportive for prices. Ideas that the gold market has reached a good value area have others suggesting a price rebound.

“With bullish sentiment reaching historically low levels … futures hitting multi-month lows (and) mandatory government spending cuts activated, I would expect bargain hunters to start searching for a bottom and a sharp recovery to develop into the market,” said Phil Streible, senior commodities broker at RJO Futures.

Participants who see weaker prices cite the market’s inability to hold over $1,600 an ounce and the bearish short-term technical chart picture for gold.

Those who are neutral or see prices trading sideways said they want to watch to see how the market develops as it trades under $1,600, especially as sentiment in the market remains negative and equities grab the headlines and investor interest.

“Technically gold remains in the negative mode; however, the $1,550 level is the beginning, we believe, of a base-building process. For this coming week we expect to see more two-way action and broad trading range,” said Adam Hewison,

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