Gold slides on profit-taking

Gold is off 0.4% as traders secure their profits on the back of last week’s surge.

The precious metal is trading down at $1265 after shooting to a two-month high overnight when concerns about Argentina’s financial health prompted dealers to fly to quality. The collapse of the Argentine peso on Friday was the biggest drop in over a decade. It sent fear of a default racing through the financial markets, which in turn boosted gold.

Although gold is back in the red today, if fears persist over Argentina we could see it surge again.  Last week it closed above $1268, and as Alastair McCaig stated it could retest the $1300 level.

On Wednesday the Federal Reserve will release its latest statement. At its last meeting, in December, the central bank decided to reduce the stimulus package by $10 billion per month, and there is talk of another $10 billion being trimmed now. If tapering goes ahead, gold could head towards the support level of $1240.

Spot Gold chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.