US Libor is starting to decline - a bullish development for Gold

Gold is back at $1,200 after waves of buying in New York Friday pushed gold from $1,185 to $1,202 in just hours. But gold remains within its recent trading range between $1,210 and $1,180, and this may continue as we head towards options expiry next week Thursday. There is large volume of options with strikes at and around $1,200. Despite gold touching $1,200, physical buying interest remains in place which, for now, supports gold on approach of $1,185.

In the US, report are witnessing a positive development. Unlike in Europe, US Libor is starting to decline. After reaching a high of 0.539% in June, 3m Libor has declined steadily to below 0.50% yesterday. This is not a big move yet but a move in the right direction nevertheless. Investor view a decline in LIBOR (London Inter-Bank Offer Rate) as a bullish development for Gold.

Furthermore, we find confidence in the strength of EM currencies which indicates that risk appetite for precious metals may remain firm.

Gold support is at $1,186 and $1,173, while resistance is at $1,206 and $1,213.