(Kitco News) – Gold prices fell under $1,200 an ounce this week for the first time in 2014, and several market watchers said it’s likely that the yellow metal will seek to take out the 2013 lows, possibly as soon as next week.
Looking at technical price charts, a nearby continuation chart shows the December 2013 low of $1,180, which is just above the June low of $1,179.40. Market watchers said with gold falling as low as $1,190.30 Friday, there’s a good chance bearish traders will try to test the strength of those support levels.
“It’s a matter of when, not if,” said Dave Toth, director of technical research at RJ O’Brien.
December gold futures fell Friday, settling at $1,192.90 an ounce on the Comex division of the New York Mercantile Exchange, down 1.9% on the week. December silver fell Friday, settling at $16.826 an ounce, down 5.7% on the week.
In the Kitco News gold survey, out of 37 participants, 26 responded this week. Of those, seven see higher prices, 16 see lower prices and three see prices trading sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
Gold prices drifted lower for much of the week, but the stronger-than-expected U.S. September nonfarm payrolls report was the impetus for the yellow metal to dip below $1,200 for the first time since December.
The U.S. Labor Department said the U.S. created 248,000 jobs in September, pushing the unemployment rate to a six-year low of 5.9%. July and August figures were also upwardly revised by 69,000.
While there were some good headline numbers, Dorothy Weaver, chief executive officer of Collins Capital and ex-chairman of the Federal Reserve Bank of Atlanta’s Miami branch, said digging into the numbers shows there are still problems plaguing the U.S. workforce.
“This was certainly a solid report today as unemployment is down to 5.9%, but going forward the ‘structural’ unemployment will continue to be the problem as many of those unemployed more than 27 weeks may not have the adequate skill sets for the jobs available,” Weaver said.
Kevin Grady, owner, Phoenix Futures and Options, said the selloff in gold Friday and for the past few weeks has been “very orderly.” That’s a sign, he said, that this is market that is heavily short, rather than a market which is seeing a lot of bullish traders selling.
Another participant agreed that sentiment remains negative toward the yellow metal.
“The romance of the gold market continues to hit the rocks. Much like the end of the bull run of the late 70’s we appear to moving into a longer-term bear market that could last for a decade. The big fans of gold have best be prepared to hang on for a very long and slow grind,” said one gold-market watcher.
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