Monday, November 11th 02:07 PM IST

Gold at risk of falling to $1250/70/Oz: Barclays

# gold  # Barclays  # precious metals  

In a weekly update on gold, Barclays said October nonfarm payrolls rising 240 k and private payrolls rising 212 k continue to put downward pressure on precious metals. The surprise rate cut by European Central Bank by 25 bp to 0.25% and keeping deposit rates at zero is a clear signal that the bank is worried about persistenly low inflation, even if deflation risks are contained.

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LONDON (Bullion Street): Gold market remains weak on likelihood of US Fed tapering to begin by March and absence of strong demand from physcial markets. stronger than expected data is set to expose gold's fragile floor, according to Barclays Research.

In a weekly update on gold, Barclays said October nonfarm payrolls rising 240 k and private payrolls rising 212 k continue to put downward pressure on precious metals. The surprise rate cut by European Central Bank by 25 bp to 0.25% and keeping deposit rates at zero is a clear signal that the bank is worried about persistenly low inflation, even if deflation risks are contained.

Strength in dollar also contribute to gold weakness in the near term. 1-month targets: EUR/USD 1.32, USD/JPY 98, USD/CHF 0.94.

Gold ETP holdins need to stabilise to provide a secondary floor in the absence of strong physical demand.Long positions have fallen in US futures market according to CFTC data. Net fund length fell 9.1 k lots, due to a combination of long liquidation (4.4k lots) and the establishment of fresh gross short positions (4.7 klots).

Physical demand remains dull in India and China while South African production has declined with gold output in September down 3% y/y and month on month.1-month targets: EUR/USD 1.32, USD/JPY 98, USD/CHF 0.94.
There is downside risk for gold towards the 1250/70 support area before we look for a bounce.- Resistance: 1315, 1344; Support 1268, 1250.Gold Exchange Traded Funds (ETF) holdings have fallen 754 tons fo rthe year to date.

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