April Gold Futures Settle 1116.4 Up $18.20

New York (Jan 31)  After impressive rallies the first three sessions this week, gold fell off its best levels but still posted a sizable gain for the week. Gold posted a five percent gain for the month of January as a withdrawal in global equities prompted some safe haven buying in the yellow metal. There was strong buying into and through the Fed announcement Wednesday as funds increased their long positions early in the week. When gold surpassed and closed over the 100 day moving average at the 1108 level early in the week, the market was then aided by technical buying and hitting buy stops taking the market up to the 1128 level. However that rally was short lived as a resurgence in the stock market and the greenback on Thursday and Friday stopped the gold rally in its tracks that took the price back to the 1108.5 level. The market recovered near 1116.0 on the close Friday. The stock market and greenback rally on Friday was largely due to actions for the Bank of Japan who again cut rates into negative territory and that the Fed testimony Wednesday afternoon was dovish concerning further rate hikes with the perception that a March rate hike is less likely.

A new month brings a new round of employment data for the first week of February. The FOMC doesn’t meet until mid-March, so I believe the gold market, to nobody’s surprise, goes back to watching economic data and the reaction the dollar and stock market will have. I would warrant some caution for the bulls here as the second half of February usually is met with downside action in price due to physical demand abating after Valentine’s Day. Having said that, this week’s employment data will be key along with movement in energies.

Source: Investing.com