The decline that gold prices suffered on Nov. 8 after the U.S. jobs report was released could easily be extended in the near future, market experts stated, citing technical analysis.
This information could be very helpful to those who want to make money trading the precious metal, as being aware of the latest developments – as well as the predictions that have been generated using technical analysis – could enable these individuals to make better, more informed decisions.
December contracts for the metal plunged to as little as $1,280.50 per ounce on the Comex division of the New York Mercantile Exchange, according to Bloomberg News. For a most-active contract, this represented the lowest figure since Oct. 17. The future later recovered and settled at $1,284.60 an ounce. This price represented a loss of 1.8 percent for Nov. 8.
The sharp decline in the price of the precious metal was attributed to a jobs report that provided strong figures and the boost that it provided to hopes that the Federal Reserve will engage in tapering of quantitative easing later this year, the media outlet reported.
Data provided by the U.S. Labor Department revealed that in October, 204,000 positions were added to payrolls, according to the news source. This figure was far higher than the median forecast of 120,000 new jobs, which was provided by economists taking part in a poll.
“To say the October nonfarm payrolls report has exceeded forecasts is an understatement,” Fawad Razaqzada, technical analyst at GFT Markets, wrote in a recent note, MarketWatch reported. “The numbers absolutely blew past expectations. After yesterday’s surprisingly strong U.S. GDP figure, this has strengthened the argument for the Fed to reduce stimulus before the end of this year … And because of that reason, gold prices have plunged today.”
Kitco News reported that after the sharp drop in the price of gold, many market experts started reading charts in an effort to predict when the decline would end. Jim Wyckoff, senior analyst at Kitco Metals, stated that the sentiment surrounding gold was undermined as a result of contracts for the commodity falling below $1,300 per ounce. He said that the contract could easily encounter further support at $1,251 an ounce.
The level of $1,250 per ounce was also identified as being crucial by Sterling Smith, who is a futures specialist, commodity research, at Citibank Institutional Client Group, according to the news source. He stated that reaching this price level is inevitable given the amount of pessimism that surrounds the precious metal.
These two market experts are certainly not the only ones to express negative sentiment surrounding the commodity. Gold entered a bear market in April, having dropped 20 percent from its record high that it attained in 2011. The metal then continued its free fall, declining to less than $1,200 an ounce in June.
Amid the sharp declines that gold has suffered in 2013, some market experts have come out and stated that they no longer think of the precious metal as being the safe-haven asset that it was before, Bloomberg reported. The price of gold is down 23 percent for the year.
As a result of this sharp decline, the precious metal is currently on track to record its first annual loss in 13 years. Gold experienced annual gains between 2000 and 2012, and experienced very robust appreciation during this period.
While the precious metal has frequently been propped up as the ultimate safe haven, this perception has been breaking down in 2012 as gold has experienced lackluster performance. Since many market experts are starting to think of the commodity in a new way, individuals who want to make money trading gold might benefit from being aware of this change in sentiment.
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