Barclays Capital describes the macroeconomic backdrop as bullish for gold, the fundamentals as bearish and investor flows and technicals as neutral. While a low interest-rate environment remains, a third round of U.S. quantitative easing is not imminent, which has pressured gold in recent weeks, Barclays says. Barclays doubts that Friday’s softer-than-forecast U.S. jobs report will prompt renewed action at the April meeting of U.S. Fed policy-holders, but it says the door to further quantitative easing does remain “ajar.” Exchange-traded-product holdings have been “resilient” despite price volatility, with preliminary March data showing a modest increase of 2.4 metric tons for the month, with net inflows in Europe offsetting redemptions in the U.S., Barclays says. However, Commodity Futures Trading Commission data show speculators trimmed their net-long positioning in U.S. futures in the week ended April 3. As for fundamentals, Barclays cites weak physical demand in China lately, as well as a strike by Indian jewelry shops that curbed buying over the last three weeks. “Despite recent weakness, we remain bullish for gold and look for a base to form ahead of support in the 1580 area,” Barclays says. “Once confirmed, we expect a move back in range, initially targeting 1700/1717 on the topside. Breaking above the latter would confirm a move toward the range highs near 1800, which we expect to cap on an initial test.”
Source:Kitco
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