Gold Prices Stabilize Ahead of Strong Demand Season

January 10, 2013 at 09:12

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The gold price oscillated between gains and losses on Wednesday as precious metals remained in consolidation mode.

Looking ahead for the gold price, Natixis analyst Nic Brown wrote in a note to clients that “We find ourselves just ahead of Chinese New Year, which seasonally is one of the strongest times of the year for gold demand, and seven weeks away from the new deadline in the U.S. political system, and we’re surprised at how low gold prices are.”

“If there was a reason for buying gold, you’ve got two good ones there,” Brown added. “If the debt ceiling is used as a political bargaining tool, that would be a potentially ugly time for the U.S. credit rating.”

From a technical perspective, ScotiaMocatta contended that the price of gold “continues to consolidate last week’s down move from $1,694 to $1,627.”

The firm went on to say that “Our bias remains lower, with $1,627 our next line in the sand. Only a close back above previous range high of $1,671 would shift our short term view to neutral.”