In the week ahead Gold Prices Are Likely To Focus On Year-End Squaring at $1,200 Level

New York (Dec 28)  Year-end book squaring, the stock market and gold’s ability to hold above the psychological $1,200-an-ounce level are likely to be some of the key factors for the precious metal next week, analysts said.

Those interviewed by Kitco News look for these factors to be, on balance, supportive in another week, which is likely to bring thin liquidity during the holiday season.

One Gold Survey saw a smaller-than-usual response as 17 participants took part during the Christmas week. Ten respondents see prices up next week, while five see prices down and two see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
Gold ticked higher this week, with much of this attributed to short covering, which is buying to offset positions in which speculators previously sold, or went short. The bounce was helped by a softening U.S. dollar. Gold for February delivery settled Friday at $1,214 an ounce on the Comex Division of the New York Mercantile Exchange, a gain of $10.30 for the week. March silver added 46.3 cents for the week to $19.453.

Several traders said much of the activity, at least until the final close of 2013, will be related to position squaring, which in turn means the potential for more short covering.

Afshin Nabavi, head of trading with MKS (Switzerland) SA, who looks for gold to remain range-bound in the near term, said he anticipates much of the activity during the early part of the week will be year-end closing of positions. Nevertheless, with so many speculative traders thought to be holding short positions, there is potential for light short covering, he said.