Gold hits two week low as investors exit longer term positions

Nick Serff, Market Analyst, City Index commented: "European stocks got a late boost going into the close on Friday after the release of U.S. University of Michigan consumer data. Sentiment rose to 73.5 in September, higher then analyst's expectations of 70.3 and higher then last months reading of 65.7. Interestingly 1 year inflation expectations also fell to 2.2 percent, down from 2.8 percent in August, as investor optimism around the globe continues to grow.

Client positions became mixed after the larger short trades seen earlier in the week were unwound over the previous two trading sessions. Investors remain sellers of FTSE and S+P, but are now net buyers of Wall Street and DAX. This could be a sign that the major bourses have reached a crossroads, and that trading could be mixed going into the early part of next week.

Gold

Spot gold traded down to 988, its lowest level in two weeks as investors continued to unwind longer term positions on continued Dollar strength. U.S. Durable goods released at 13:30 London time caused a spike higher in the price of the Dollar, which in turn caused gold to drop back below important support at $990. U.S. Durable goods orders were forecasted to hit the market at 0.5 percent, but disappointed falling -2.4 percent. The net long position of gold futures has hit some very high levels over the past several weeks, so the downside move seen is not unexpected. If weakness does continue we could see a test of trend line support around 960, before building a base."