Gold jumped higher in Fridays’ session on news that the Chinese Central bank had cut interest rates to stimulate a flagging economy. Gold is generally considered a hedge against sliding currencies caused because of a loose monetary policy. Another reason for the gold prices to spike in the session were comments from the European Central Bank chairman Mario Draghi who said that the ECB was prepared to take all unconventional measure to support the economy and make sure that the Eurozone economy doesn’t dive into a recession. In the Asian morning session, gold prices are currently trading flat but maintain a positive bias which is a huge positive as traders believe that there is follow up buying present at current levels. It is imperative to state that Gold prices had been under pressure over the last month ever since the Federal Reserve decided to end it bond buying program which was seen as a huge negative for the precious metal prices.
In the coming week, there is the all important inflation data coming out of the Eurozone and traders expect volatility to be high as the US heads into the Thanksgiving holiday. Traders would also be closely watching the OPEC meeting to understand the stance taken by countries on the prices of crude.
Chartists on the street are cautious and believe that gold has been able to move above the all important $1200 level. The next level of resistance for gold comes at $1207 and only a close above this level would see prices head towards the $1241 level. The relative strength index for gold have given a buy signal which is a positive indicator. The momentum indicators for gold are showing signs of a reversal which is indicative of a shift towards the buy side.