Published: Friday, 23 Nov 2012 | 2:34 PM ET
Gold futures settled above $1,750 an ounce for the first time in more than a month on Friday, gaining as dollar weakness and options-related buying triggered a technical breakout.
After trading slightly higher in early U.S. dealings, gold surged suddenly to above its 50-day moving average, a key technical resistance the metal had failed to breach in more than a month.
Analysts said Friday’s gains could set up for a rally above the more formidable $1,800 level, which bullion has not seen since its rise to a record $1,920.30 in September 2011.
“It’s definitely a technical breakout above the 50-day moving average for the short term. If we break above $1,800, the next real significant resistance will be the prior all-time high near $1,900,” said Adam Sarhan, CEO of Sarhan Capital.
Markets could be choppier than usual in thin trading on Friday, with the CME metal markets closing early and the U.S. stock market open for only a half day of business due to the U.S. Thanksgiving holiday on Thursday.
Bullion also benefited from the dollar falling 1 percent due to the euro’s strength on hopes for a Greek aid package and to a surprise improvement in German business sentiment.
Spot gold [XAU= 1752.50 — UNCH ] was up 1.4 percent at $1,752 an ounce.
U.S. gold futures [GCCV1 1751.40 23.20 (+1.34%) ] settled up $23.20 an ounce at $1,751.40 in heavy trading. The first-notice day for December is next Friday.
Strong buying related to next Tuesday’s expiration of the popular December COMEX options also lifted gold. Heavy positioning of the $1,750 and $1,800 strikes in call options could increase volatility and lift prices, traders said.
Gold outperformed other commodities, which also benefited from a weaker dollar. The U.S. dollar index is down 1 percent and on track for its first weekly decline in five weeks.
“The dollar here is just getting smacked so hard in a really thin market, so it’s easy for gold and silver to break out of some key levels without a lot of resistance,” said Matthew Schilling, commodities broker at futures brokerage RJ O’Brien.
“It’s a dollar play today,” he said.
Among other precious metals, silver [XAG= 34.10 — UNCH ] last rose 2.5 percent to $34 an ounce. Platinum [XPT= 1614.70 — UNCH ] was up 2.2 percent at about $1,614 an ounce, while palladium [XPD= 662.00 — UNCH ]gained 1.2 percent to about $662 an ounce.