Gold prices are near unchanged this morning, rebounding from a $1,211 overnight low in Europe. Banks in the United States are closed tomorrow for Good Friday, and many traders are following suit. Wednesday’s losses for gold snowballed as technical selling exacerbated the drop in prices.
Nymex crude is down almost 3% in morning trading after falling 4% on Wednesday. Stocks are down for the third day as a stronger dollar weighs on commodities and profits.
A media blitz by hawkish Fed regional presidents has raised the odds of an April rate hike, which is boosting the dollar and putting pressure on gold. Wednesday saw gold futures drop by 2% ($24.60), to settle at $1,224 an ounce. Spot gold ended the day at $1,219.60 for a loss of $28.20.
Gold has fallen through the bullish daily channel it had built over the last several days, and will need to regain strength to keep bulls in near-term control. Mild support should appear at $1,217, backstopped by $1,211 and $1200. First resistance is at this morning’s high of $1,224. Rising through that level will see $1,230 as the next big hurdle.
The Fed-infused dollar is the story of the day, as it enters the fifth day of its current rally. Stocks, oil, and commodities are all suffering under the boot of the surging greenback. The euro is lower after the Brussels terror attacks, and the pound is being pounded over growing fears that Britain will vote to leave the EU in June. These two currencies make up the majority of the DXY basket of currencies, which is helping dollar strength.
The dollar rally on rate hike fears isn’t the only thing holding oil down. The US Energy Information Agency reported that crude stockpiles jumped by 9.4 million barrels last week, triple expectations, and hit a new all-time high of 532.5 million barrels. This is the sixth week in a row that US oil stockpiles have broken records.
A drop in durable goods orders has bond traders betting that the economy is still too slow to allow an interest rate hike anytime soon. Longer-term Treasuries are being snapped up on expectations that rates will not be rising anytime soon.
The dollar rally and Fedspeak boosting expectations of an imminent rate hike aren’t the only bearish factors for markets today. Traders are afraid of being caught out over a long weekend, especially with nerves still raw from the Brussels terror attacks.
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