Gold Prices Lower On United States' Economic Optimism

By Dave Brown — Exclusive to Gold Investing News

Gold Prices Lower on United States' Economic Optimism

Gold prices have declined this week due to strengthening investor optimism on the  United  States ' economic outlook, with a sharp rise in treasury yields also contributing to gold's muted prices. The decline has resulted in greater investment demand for US dollar-denominated assets. 

Spot market gold prices rebounded by about 0.40 percent on Thursday after contracting nearly two percent during Wednesday's trading session. Gold prices are trading in the range of $1,659.10 per troy ounce, having declined nearly four percent during the week after the Federal Reserve issued a more optimistic economic expectation. The Fed's statement has temporarily diminished market expectations of additional policy measures to keep rates low. Investors will note that the week's decline in gold prices has encouraged a demand stimulus in top consumer India.

Technical analyst perspective for “critical” support levels

Frank McGhee, Head Precious Metals Trader at Integrated Brokerage Services, says gold prices may be close to a critical support level, commenting that “we are at some very critical levels around the 200 day exponential moving average. If these ranges hold we could see a short covering rally. If they don't, we could see another round of longer-term liquidation.” For the longer-term perspective, McGhee stated, “I don't think the problems that took the price of gold up to $1,900 have ended by any means; this is just a short-term band-aid.”

Quadruple witching 

Many investors will look forward to Friday, when contracts for stock index futures, stock index options, stock options, and single stock futures all expire. Their expiry could mean a relatively volatile trading session with a higher volume of transactions in the market. The Consumer Price Index is expected on the same date, and could provide additional details to support or contest the case of a strengthening US economy.