(Kitco News) - Analysts look for the gold market to stay within its recent trading range between Christmas and New Year’s Day, although they caution there is also potential for an outsized move should there be any breaking geopolitical news that impacts markets.
Gold edged higher this week. Around 12:30 p.m. EST, the Comex February futures were at $1,075.80 an ounce, up $10.20 from last Friday for a gain of 1%. March silver rose 29.5 cents, or 2.1%, for the week to $14.375.
Retail and professional investors alike are bullish for the next week in a pair of Kitco surveys. Among retail investors voting in an online poll, 83 people, or 46%, look for an uptick in prices next week. Sixty-eight respondents, or 37%, are bearish, while 43 people, or 13%, are neutral. Among market professionals, seven of 14 respondents, or 50%, look for a gain. Three analysts, or 21%, expect lower prices, and four, or 29%, are neutral.
The gold market is likely to be thin, with many traders taking off the week between the two holidays, observers said. Further, many participants have closed their positions ahead of year-end.
“Unless there is some kind of geopolitical event, I don’t expect the market to do much,” said Daniel Pavilonis, senior commodity broker with RJO Futures. “I can’t imagine there is going to be anything eventful going on next week unless there is some serious geopolitical situation or event outside of the market norm.”
The U.S. economic calendar is light next week, with the main reports being consumer confidence due out Tuesday, then weekly jobless claims and the Chicago Purchasing Managers Index next Thursday.
Barring any breaking news, Afshin Nabavi, head of trading with MKS (Switzerland) SA, said he looks for a potential trading range of $1,065 to $1,085 an ounce.
“Half of the market will be off, to be honest,” he said. “If anything happens, it will be because lack of liquidity more than anything else.”
In such conditions, any large trades have the potential to impact prices more than they normally would.
“Generally, you get some choppy trade (around) these holidays,” said Charles Nedoss, senior market strategist with LaSalle Futures Group.
Many traders have already pared or closed positions ahead of year-end. However, there could still be some more of this type of activity, Pavilonis said.
Gold often reacts to outside markets. As a result, traders will keep tabs on the U.S. dollar and equities as always, observers said.
Otherwise, in the absence of any major news, the market could trade on the basis of technical-chart factors, said Charles Nedoss, senior market strategist with LaSalle Futures Group.
“People will be watching for a retest of the downside,” he said. “I think it will be technical trade.”
In particular, traders will be eyeballing the $1,050 area and just below, he said. The February futures put in a double-bottom during December at lows of $1,045.40 on Dec. 3 and $1,046.80 on Dec. 17.
Technically, gold is right around some widely followed shorter-term moving averages after the big downdraft earlier this month and partial recovery. The 10-day average is $1,067.20 and the 20-day average is $1,067.40. The 50-day averaged is higher at $1,098.40, with the 100- and 200-day averages well above this.
By Allen Sykora of Kitco News; asykora@kitco.com
