Gold has struggled to maintain breaks past the $1,160 resistance level this week after rising to a four-month high of $1,168.70 an ounce on Monday. Movements in the currency markets, particularly amongst the dollar and the euro, continue to influence gold's direction.
Earlier in the week, gold got a lift from a stronger euro vs. the dollar on news that European leaders had agreed to an emergency-loan facility at 5 percent for Greece; however, investors later had second thoughts about the viability of the plan to aid Greek debt and the yellow metal sank as funds flowed out of the euro and into the perceived safety of the dollar.
Profit-taking is also plaguing gold as any breaks above $1,160 are prompting some investors to sell, dropping spot prices back down to the $1,150 support level. And higher prices are keeping physical buyers in China and India out of the market, placing further downward pressure on gold.
Gold in New York dropped against a rebounding dollar Thursday morning to as low as $1,149.60 an ounce, but managed to pick up its losses soon after hitting a high of $1,162 mid-day, closing just a tad under $1,160 an ounce.
Over the short-term, the yellow metal is expected to face further resistance at the $1,160 level while finding good support around $1,140 to $1,150 an ounce, says Deutsche Bank trader Michael Blumenroth. “That has been established as the downside as we take a breather and get some strength for the next upward move. I think $1,180 will be the target next week, and ahead of May."
The euro and the dollar will continue to provide direction so keep an eye on news out of the US and the euro zone.
