By Russell Glaser
Gold prices were relatively unchanged yesterday as the commodity traded in a tight range. Yesterday’s trading had low volatility and light volume that characterizes end of year trading.
The price of spot gold fell marginally to $1,387.36 after opening the day at $1,389.31.
During yesterday’s trading price movements were subdued with little volatility as the price of spot gold moved between an $8 price range. The 20-day Average True Range is more than twice that at 17.
Many traders are attempting to balance their funds and taking risk off the table as the New Year approaches, booking gains in the commodity that is up more than 25% this year. The open interest in the number of Comex gold future contracts has dropped to 582, 133 lots from 650,764 in early November.
The movement in the dollar has also limited the volatility of gold prices. The EUR/USD traded in a tight range yesterday, closing down at 1.3112 after opening the day at 1.3133. Gold prices often take direction from the dollar’s movement as a stronger USD makes gold prices more expensive for those traders who do not hold dollars.
Volatility may pick up this afternoon with the release of US Core Durable Goods Orders as well as weekly unemployment claims. Both are scheduled for release at 13:30 GMT. US New Home Sales are also due out at 15:00 GMT. Better than expected numbers may strengthen the dollar and in turn traders may bid the price of spot gold lower. The next support level rests at a rising support line that comes in today at $1,364.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.