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Gold Limps into October with a Likely Support at $1,100

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Gold is losing its luster

The most actively traded contract for gold futures on COMEX—a commodity division of NYMEX—fell 0.13% and closed at $1,113.70 per ounce on October 1, 2015. It’s the fifth day in a row that gold futures fell. Gold touched the day’s low of $1,100 and bounced back from this tentative support level. Silver futures almost traded flat and settled close to the previous day at $14.51 per ounce. Gold also had a tentative trading range of $1,110–$1,150 in the past week.

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Bearish sentiment

Gold sentiment remains bearish as investors cut back their gold holdings in anticipation of the US jobs data. The data are due in the morning on Friday, October 3. Investors and Fed officials will likely watch the data closely. The improvements in the labor market give backing to the economy. They also boost the liftoff. In turn, this will impact gold.

Under the current scenario, the rate hike gestures are the most influencing facts for gold. Investors will closely watch the Fed’s move and the overall economic growth. A stronger jobs report on Friday could lead to a hawkish outcome for the October FOMC (Federal Open market Committee) policy setting meeting.

On the first day of the new quarter, gold prices rose due to losses in US stocks. Gold and stocks often move in opposite directions because investors view the precious metal as a safe-haven asset. While rising stocks indicate a brighter outlook for business activity, gold can store value during market turmoil.

Gold prices affect mining companies’ prices like IamGold (IAG), Eldorado Gold (EGO), and Newmont Mining (NEM). These three stocks account for 10.30% of the VanEck Vectors Gold Miners ETF (GDX). Other ETF investments that take their price changes from gold include the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU).

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