Higher oil prices and equities are weighing on gold this morning, as a risk-on attitude takes hold in the markets. Spot gold prices are down one half of one percent early in New York trading.
April gold futures, which had closed Wednesday before the big Yellen Bounce in gold occurred, rose by $35.20 (2.9%) to settle at $1,265 an ounce. Spot gold closed down slightly for the day, giving back $4.50 to close at $1,257.60.
This morning’s gold numbers have first resistance at $1,255, with the next goal being $1,260. Support is first seen at $1,246, then at $1,237. The dollar, which is seeing marginal gains after the biggest two-day loss since 2009, is helping cap gold prices this morning.
The Dow finally climbed into the black for the year on Thursday, up 155 points (.09%) with the S&P 500 and Nasdaq also posting modest gains. Stocks were buoyed by a 4.5% gain in Nymex crude, as April oil futures closed above $40 for the first time this year. Higher oil prices are also helping emerging market stocks, which in turn are helping European and US stocks.
This morning, West Texas Intermediate crude contracts for April are up 2%, showing the increasing belief that there will finally be a meeting of the world’s top oil exporters next month to discuss the global oil glut. We’ve heard this song before, but hope springs eternal.
Even though gold is down $9 in the last two days, it seems likely that it will ride Wednesday’s $30 gain to a positive close for the week. As silver attempts to stay above $16 at the close, chatter is building in the market that the white metal is finally poised to begin a breakout like gold has seen this year. Many see a close above $16 as the sign that silver has finally begun its run.
Analyst Chris Kimble is quoted by MarketWatch this morning, predicting that the dollar may be starting a trip south when compared to gold. The dollar/gold ratio has not only formed a “death cross” (50 DMA falling under 200 DMA,) but it also attempting to break downward through the bottom of the trading channel formed over the last three years.
Traders are ready to give last rites to the dollar rally, as the presumptions of the Fed’s timetable for interest rate hikes have proven overly optimistic. Those impending rate hikes have been scaled back to two this year instead of four. The prospects of higher interest rates were what was behind the dollar’s performance this year. Now that the situation has changed, the dollar no longer has that underpinning.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product