(Kitco News)- In overnight trading gold prices dropped to almost three-year lows. Gold market has seen weak-handed technical short-selling and long liquidation in the futures markets because of the several factors, including the strong U.S. economy that is meeting with the Federal Reserve will begin to take away its monetary stimulus program. Spot gold was last quoted down $39.90 at $1,238.25. Comex August gold was last down $39.10 at $1,236.00 an ounce.
On Tuesday, the strong U.S. economic data released further boosted notions the Fed will start to curb the U.S. economy from its easy-money policies, for some years have been a bullish fundamental factor for the raw commodity sector, counting gold.
European Central Bank President Mario Draghi claimed Wednesday that the ECB will remain on its monetary policy accommodative for future notice. Draghi’s statement rebounded on other main central bank officials whom earlier this week made other remarks. Several speculations in the market place that Ben Bernanke Fed Chairman believes the market place misunderstood the results of last week’s FOMC meeting as aggressive.
Wednesday morning, the U.S. dollar index, is higher and reached a three-week high overnight. The USD bulls on their side have technical momentum.
The U.S. economic data that are released Wednesday contains the third-quarter GDP estimate, the weekly DOE liquid energy stocks report and the weekly MBA mortgage applications survey.
The London new A.M. fix is at $1,229.00, and the new P.M. fixing is at $1,236.25.
Technically, August gold futures prices are in an 8-month-old downtrend on the daily bar chart. The next major, longer-term downside price targets are $1,100 and then at $1,027 for nearby Comex futures. The gold market bears are in strong near-term technical command. The Bears next near-term downside breakout price objective is closing prices below psychological support at $1,200.00. The gold bulls’ next upside near-term price objective is to produce a close above psychological resistance at $1,300.00. The first resistance is sighted at $1,250.00 and then at last week’s low of $1,268.70, as for the first support is sighted at the overnight low of $1,223.20 and then at $1,200.00.