Gold Prices Weekly Forecast March 13-17
New York (Mar 12) Gold prices moved lower throughout the majority of last week’s trading, finally bouncing after the release of Nonfarm Payrolls on Friday, as the US dollar index (DXY) sold off. However, for the week over all, the April contract on the COMEX division of the New York Mercantile Exchange lost $30.5 in last week’s trading, a 2.5% decline, closing the week out at $1,204.5/ounce.
There could be further movement to the upside early in next week’s trading given the oversold condition of gold prices at the present time. On the upside, resistance comes in at former support near the $1,220/an ounce level. This level was tested with the low established in mid-February, which represented a re-test of the highs established in mid-January as well as January 23/24.
At present, a break above this level in response to an oversold condition is not expected and a return to this level should represent a low-risk selling opportunity.
The dollar gained ground in last week’s trading ahead of the release of the Nonfarm Payroll report on Friday. Expectations for the report were high, given the ADP Employment Change data which was announced on Wednesday at 08:15 ET. The number came in at 298K versus consensus forecast for an increase of 180K.
Nonfarm payrolls then also increased greater than forecast, coming in at 235K versus an expected reading of 188K for the month of February. January data was revised up to 238K from the original figure of 227,000, and the three-month moving average increased to 209,000 from 186,000.
This sets the stage for an interest rate increase at the Fed’s next meeting on March 14-15. At present, Fed fund futures are calling for an 88.6% probability of an interest rate increase. This would boost the dollar and likely dent gold prices further, despite the potential for an upside reaction early this coming week, prior to the Fed annoucement.
On the downside, the next level of support stands at the low established January 27 at $1,182.6. This low represents an exact test of the 61.8% retracement level of the advance from the December low to the high established in the latter part of February. A sustained move below this level would increase the probabilities of a complete retracement back to the December low, which comes in at $1132.0/ounce.
Source: EconomnicCalendar
