By Russell Glaser – The price of spot gold has fallen the past two days as a rise in risk taking has boosted riskier assets such as equities and higher yielding currencies. Better than expected U.S. pending home sales have increased traders risk appetite and the positive sentiment may continue into the end of the trading week.
Following the rise in global equities, spot gold prices are trading lower at $1216 from an opening day price of $1221.
Yesterday and today the major equity indices have been trading higher following better than expected U.S. pending home sales numbers. New home sales rose 6.0% for the previous month. Market expectations were for a rise of only 4.9%.
The Dow Jones Industrials Average finished the day up 2.25%. The DAX is up 1.77% today while the Nikkei Average is up 3.24%.
The higher risk taking is fueling the declines in spot gold along with spot crude oil, the dollar, and the yen. The main benefactors to the risk taking environment have been equities and higher yielding currencies such as the Australian dollar and the euro.
A trend of rising risk taking may continue to prevail in the market with the major upcoming economic data releases. Today will bring the ADP Non-Farm Employment Change and U.S. manufacturing data. Tomorrow will have the all important U.S. Non-Farm Employment Change numbers. The key data release will provide clarity as to the extent of the economic recovery in the U.S.
Positive numbers, especially from the unemployment picture could continue to bring declines in spot gold prices. The next minor support level for spot gold rests at the level of $1213 while the next major support rests at $1192.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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