Gold Prices Remain Steady on Fears over U.S. Banking Sector

(CEP News) - Gold prices appear to be consolidating after breaking through $1,000 an ounce on Friday. Traders and strategists expect it is only a matter of time before prices break the record of $1,032.70 set on March 17, 2008.

This morning, rising positive sentiment helped to drag CBOT spot prices to a low of $976.22 but the recent drop in equities has pushed prices higher to $990.

Colin Cieszynski, an analyst at CMC Markets, said that despite today’s pullback in the precious metal, the trend is still in place for prices to move higher. He added a test of $1030 in the near term would be very possible but that the climb might not be steady.

“Note, however, that [gold has] been advancing in a step pattern of rallies followed by consolidation at higher levels, so it remains possible that [prices] may consolidate near current levels in the short term before longer-term trends re-assert themselves,” he said in a note to clients.

Patricia Mohr, commodities economist at Scotia Capital, said gold prices continued to benefit on the back of the uncertainty gripping the financial sector. She did not expect prices to drop lower in the short term.

There would have to be “growing positive sentiment” towards the banking sector before gold prices fell, she said. “Right now there is a real reason to buy gold.”

WTI Crude oil is down $0.04 to $39.99 while ICE crude oil is trading up $0.07 to $41.96.

Meanwhile, ICE RBOB gasoline futures are down $0.45 to $107.01 and Globex natural gas is down $0.01 to $1.27. Heating oil at the ICE is down $0.95 to $122.35.

In the mining sector, spot gold is trading down $0.56 to $992.35 USD. In Canadian dollars, gold is down $1.70 to C$1241.66. Silver contracts at the CBOT are down $0.04 to $14.44.

Bloomberg’s index for base metals is up 0.58 points to 105.29. Wheat futures at the CBOT are down $8.50 to $522.00.

All data taken at 12:03 p.m. EST.

By Neils Christensen, neilsc@economicnews.ca

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Posted in Categories: Commodities, Economy, Releases, USA.