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Gold futures market analysis

Gold futures continued higher once again yesterday, having received fresh impetus following the market’s reaction to the FED statement on Tuesday, which hinted at further quantitative easing measures to further underpin the US economy, and now christened QE2! ┬áThe December gold futures contract on CME Globex, opened gapped up on Wednesday, providing further evidence of the bullish momentum for the precious metal, which is now providing the ultimate safe haven, with many investors appearing to have abandoned the US dollar to its fate. On the day, the contract just failed to breach the psychological $1300 per ounce level, before pulling back to close at $1292.50, a level that has been maintained in early trading, with the gold futures contract trading at 1292.70, up 0.6 on the day so far.The long term outlook remains firmly bullish with all three moving averages pointing sharply higher, and by the end of the week we should see gold futures trading well above the $1300 per ounce price, as we move towards our longer term price of $1500 per ounce in the first quarter of 2011.

With very little fundamental news due for release today, many of the markets are simply drifting sideways, with little impetus from thin trading volumes, with the only tier one news item coming later in the day, and the release of the US weekly unemployment claims, followed by existing home sales. The former of these is expected to remain flat at 451,000, virtually unchanged from last week’s 450,000, and providing further confirmation of a potential double dip┬árecession ( if any more were needed), whilst the latter may provide some relief for the US dollar, with a forecast increase in home sales, up 280,000 from last month’s 3,830,000 to a forecast 4,110,000 – a bright spot in an otherwise bleak economic picture.