Gold prices slip ahead of G20 meeting

Gold slipped below $1,650 an ounce in thin trading on Wednesday as investors hugged the sidelines ahead of a G20 meeting later this week which is expected to give clues on currency policy.

China’s week-long Lunar New Year holiday also curbed trade.

Gold suffered technical selling pressure this week, with prices sliding to their lowest in more than a month at $1,638.82 after breaching a succession of support levels.

Spot gold eased 0.2 percent to $1,647 an ounce by 1306 GMT, recovering from the previous session’s one-month low of $1,638.82. U.S. gold futures for April delivery eased 0.1 percent to $1,647.30 an ounce.

Some traders said they were confident chart support above $1,630 an ounce will keep losses in check.

“Prices are holding well around the $1,640s area … it looks like every time you get close to the bottom of the range there are some buyers around,” MKS’s head of trading Afshin Nabavi said.

“We should hold the $1,635 level on the downside … The market is looking at anything for direction for the time being and players are awaiting the G20 at the end of the week as something that could provide it,” Nabavi said.

G20 finance ministers and central bank governors are set to meet in Moscow on Friday, with negotiations around competitive currency policies likely to dominate.

The Group of Seven rich nations tried this week to cool growing tension over exchange rates, sparked by weakness in the Japanese yen, but markets found the effort lacking in clarity.

European shares recovered earlier losses, while the euro firmed against the dollar after better-than-expected euro zone industrial output data.

Gold has tended to track stock markets for much of the last year, benefiting from a sharper appetite for assets seen as higher risk, but the relationship is fluid.

“Support from both the investor and spec (speculative) community is needed in order for gold to stage a convincing recovery from here,” UBS said in a note. “But the lack of urgent fundamental motivation makes it difficult for gold market participants to muster enough conviction.

“After some support around $1,639, the next technical target is $1,625,” UBS said. “We’d expect revitalised interest there.”


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell