Gold trading outlook: futures rebound from five-week low

Gold rebounded from a one-month low on Thursday after European officials failed to reach an agreement for an extension of Greeces bailout program.

Comex gold for delivery in April was up 0.21% at $1 222.2 per troy ounce at 07:46 GMT, shifting in a daily range of $1 223.8 – $1 218.0. The precious metal fell 1.02% on Wednesday to $1 219.6, having previously fallen to its lowest since January 9th at $1 216.5.

Europes finance ministers made progress during the negotiations in Brussels, but were not able to reach a joint agreement on how to proceed with the situation, said Eurogroup Chairman Jeroen Dijsselbloem.

However, Greece Finance Minister Yanis Varoufakis said he believed that European officials will reach a deal on Monday, when discussions will resume.

Greeces current bailout agreement is set to expire at the end of this month, leaving the country without funding. In December Europe agreed to extend the deal with Greece by two more months.

The failure to agree on a deal spurred a lot of uncertainty around Greeces future and its possible exit from the Eurozone, prompting investors to seek the safety of the metal.

However, gains were capped by a strong dollar and the prospect of an eventual increase in US interest rates, which have been kept close to zero since 2008.

The US dollar index for settlement in March was down 0.13% at 94.970 at 07:49 GMT, holding in a daily range of 95.100-94.905. The US currency gauge gained 0.25% on Wednesday to 95.090. A stronger greenback makes dollar-denominated commodities more expensive for holders of foreign currencies and curbs their appeal as an alternative investment, and vice versa.

Meanwhile, India regained its top spot as the worlds largest gold consumer, according to a report by the World Gold Council released on Thursday.

Global demand for the precious metal fell 4% in 2014 to its lowest in five years at 3 923.7 metric tons. During the past year India purchased a total of 842.7 tons, 14% down compared to the previous year, while China saw a decline of 38% to 813.6 tons.

Analysts project both countries to purchase between 900 to 1 000 tons in 2015.

Additionally, the report showed that central banks boosted their gold reserves in 2014, marking a fifth year of increases. Overall, they acquired 477.2 tons of the yellow metal, the highest amount in 50 years. The figure represents a 17% increase compared to the previous year. For 2015 the council projected more than 400 tons to be bought by governments.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, remained unchanged on Wednesday at the highest level since late September at 773.31 tons. Changes in holdings typically move gold prices in the same direction.

Pivot Points

According to Binary Tribune’s daily analysis, April gold’s central pivot point on the Comex stands at $1 224.9. If the contract breaks its first resistance level at $1 233.4, next barrier will be at $1 247.1. In case the second key resistance is broken, the precious metal may attempt to advance to $1 255.6.

If the contract manages to breach the S1 level at $1 211.2, it will next see support at $1 202.7. With this second key support broken, movement to the downside may extend to $1 189.0.