HXPM Gold Weekly Gold Review 110314: Earthquake in Japan brought downside pressure to precious metals

Weekly Gold Review: http://www.hx9999.com/en/comment_week_630.html

Gold moved most fiercely on Monday last week with day high of 1,444.60 USD. Trend weakened as the commodity failed to break through 1,450 USD. Price had been pressed by profit-taking and short-selling activities within the week. Before the Japan’s disaster on Thursday gold once fell below 1,403 USD. Last Friday being hit by a magnitude 9 quake, besides loss in lives and properties, Japan economic recovery also suffered. Yen slipped upon the disaster to 83.30. Gold also fell on the stronger greenback with day low of 1,404.70 USD on Friday, closing at 1,418 USD.

Technically both precious metals were undergoing the declining trend before the earthquake. Adjustments in silver was solid. Price had been stepping downwards since it reached the weekly high of 36.75 USD on Monday, and fell to 34.65 USD after the Japan’s disaster on Thursday. Gold tracked better than silver with rebound during Friday. While silver settled further lower with day low of 34 USD last Friday, the weekly range was extented to 7.5 %.

Yen initially dropped under the threats of aftershocks and radiation leak. But market outlook was mixed as Japanese insurers were expected to raise cash through selling their foreign assets. The long-term economic effects from the quake and damage of nuclear plant were still uncertain. While the dollar index reversed after testing the 76.124 low last Monday and the trend was likely to continue this week. Oil retreated as the situation of Lybia came to a standstill, falling over 7 USD to below 100 USD. The weakened oil price tended to negatively affect gold in the coming week.

Gold dropped in the two latest trading days last week to form a short-term downside trend technically. Lacking of momentums the next significant support would be found only at 1,360 USD if the commodity breaches the 1,400 USD level. Whereas decline in silver was considered to be effects of profit-taking and price adjustment as demand continued to extend. Price has risen from 28 USD to 36.75 USD since February, with a range exceeded 31 %, an overbuying indication. Trend tended to go downward until significant support is reached. The next supporting level should be 30 USD.