Gold came under continued pressure yesterday, as investors continued to liquidate positions in light of lowered expectations of liquidity growth. Currently, gold is trading at around our target of $1,650, which we feel represents good value, based on our analysis of futures market positioning and the Fed’s current monetary policy stance. We also mentioned yesterday that we could see a fall to $1,630, although it appears as if physical market activity for now is providing support at sub-$1,650 levels, keeping prices off this low mark. Not surprisingly, our Standard Bank Gold Physical Flow Index is showing considerable buying, as participants are tempted by the recent fall in prices.
Gold support is at $1,628 and $1,607. Resistance is $1,677 and $1,704.
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