(Kitco News) - After a strong start, the gold market is preparing to end the week with a whimper as new life in the U.S. dollar holds the precious metal near critical support.
December gold futures last traded at $1,924.30 an ounce, down 1% on the day. According to some analyst it will be important for gold to hold support around $1,920.
“Many stop-loss orders are likely to be placed below it, so it will be important to maintain this support area. Otherwise the correction could drag on significantly longer,” said analysts at Commerzbank.
Renewed weakness in gold also comes as weak economic data weigh on the euro, boosting the U.S. dollar.
The greenback is also attracting some bargain hunters after falling to a two-year lower earlier in the week. IHS Markit's flash Composite Purchasing Managers' Index for the Eurozone, fell to 51.6 from July's final reading of 54.9. The numbers for August were worse than expected.
Following the Eurozone PMI data, IHS will release its preliminary report for the U.S. at 9:45 am Eastern time.
According to some currency analysts, the greenback is also attracting some bargain hunters as the U.S. dollar index fell to a new two-year low earlier in the week. The index last traded at 93.26, up 0.63% on the day.
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2924175530478188){kind=small}
Although the gold market is expecting to see its second week of losses, sentiment still remains fairly positive. Many analysts see the current price action as a healthy consolidation period. Some analyst aren’t ruling out lower prices with some even seeing the potential for prices to test support around $1,800 an ounce.
“Regardless of recent losses, the fundamentals remain in favour of higher Gold prices with a rebound potentially on the cards,” said Lukman, senior research analyst at FXTM. “A broadly weaker Dollar, negative US yields, pre-election jitters and rising coronavirus cases in the United States are likely to keep gold shining in the medium to long term.”
George Gero, managing director at RBC Wealth Management, said that although gold is struggling to catch a bid Friday, options in the futures market have increased, an indication that investors continue to actively hedge their bets.
He added that he continues to expect gold investors to continue to buy on dips.
