Gold is building a support base above $1,179 an ounce this morning in the face of positive economic news and good strength in the dollar. COMEX gold futures (aka “paper gold”) logged a 1.2% gain yesterday to crack the 200-day moving average of $1,176, to close at $11.179.80 an ounce. This puts gold futures down only 0.4% for 2015. Spot gold stands strong this morning, as it decisively broke through resistance at $1.179 an ounce, closing up 1.32% at $1,184.20/oz, a gain of $15.20 per ounce. Silver was buoyed by gold’s big gains to close up 22 cents at $16.12/oz.
Bullish News For the Market
Gold saw slight momentary weakness this morning as core consumer inflation in the U.S. was reported to have grown in September at a 1.9% annual rate, but headline inflation saw a 0.2% drop—the worst in eight months—due to a huge 9% drop in gasoline prices.Lower energy costs more than compensated for a 0.4% jump in food prices. First-time jobless claims for last week fell by 7,000 applicants to 255,000, Analysts had expected an increase of 8,000. This matches July’s numbers, which were the lowest since 1973.
This news revived a swooning greenback, as the U.S. dollar jumped over a half-percent after closing below 94 on the DXY dollar index on Wednesday. The rise in the dollar pushed the euro down from its $1.1474 close down to the $1.1380 range.
Gold Stands Strong
Gold shrugged off all these bearish developments after a brief blip under $1,176, to recoup all losses and trade in positive territory above $1,184. Buyers outweighed expected profit-taking in early trading, as gold resists the downward pressure from a stronger dollar. $1,179 was a former resistance level, and it took gold three tries to close above that mark. It now seems that gold is resting above the $1,180 range to build a new level of support. The new resistance level is at $1,189, with support at $1,169, then $1,160.
Beware the Fed Heads
Gold (and everything else) is hinging in expectations of when exactly will the Fed raise interest rates from near-zero. Today features three talking Fed heads, which could either reinforce perceptions, or muddy the water further if they talk at cross-purposes.
New York Federal Reserve president and vice chairman of the Open Market Committee William Dudley speaks at the Brookings Institute at 10:30am Eastern Time, while St. Louis Federal Reserve president James Bullard speaks at a conference on monetary policy at the same time. Cleveland Federal Reserve president Loretta Mester speaks about economic growth at 4:30pm.
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