Gold Prices Hit By Profit Taking

April 18th, 2016 by

oil-and-goldProfit taking and risk-on sentiment on Wall St. this morning erased a $10 overnight gain for gold prices. Stocks in New York had opened moderately lower, keying off European markets, but quickly rose into the green. The dollar showed some softness in London, which carried over into the US open.

The collapse in oil production talks overnight in Doha, Qatar saw crude prices fall more than 6%. The panic subsided a bit in New York, as losses eased to “only” 3%.

Technical numbers today find support at $1,230, then $1,225. $1,243 is the first resistance that gold will have to overcome today, with $1,250 being the next barrier.

Despite the recent choppy movements, gold futures are still up 16.92% for the year. The only commodity higher is silver, with a 17.72% YTD gain.

Friday’s Price Action

Just like this morning, oil was calling the shots for the stock market Friday. Wall St. closed slightly down on Friday, but ended the week with a gain.

Oil futures were not so lucky on Friday. Nymex crude was down for the third day in a row, falling -2.8% to settle at $40.36. Tuesday’s gains were so huge, that three bad days couldn’t force a negative close for the week. WTI wrapped up the week with a 1.6% gain. Brent futures fared slightly better Friday, down 1.7% to $43.10 a barrel. It still notched a weekly gain of 2.7%.

Even though June gold futures gained $8.10 Friday, it posted its first weekly drop (-0.8%)in three weeks. Silver seems to have stolen gold’s mojo this week, putting a 6% weekly gain in the books.

Spot gold closed near the top of trading on Friday, adding $6.50 to close at $1,234.

Disappointment in Doha

burning-oil-industrySaudi Arabia pulled a bait and switch on the other dozen or so oil ministers gathered in the Qatari capital of Doha yesterday, by suddenly announcing that it would not sign any agreement to freeze oil production unless Iran also signed. This of course was a non-starter, since Iran just had years of international sanctions removed, and its present production is half what it was before. Saudi Arabia’s attempt to place the blame on Iran backfired, as most everyone else doesn’t think it would be fair to hold Iran to such low levels of production.

The Qataris must have know that the Saudis were going to sandbag everyone, as they told the Iranians Friday that only nations who were willing to sign the agreement should attend. Tehran logically took this as a dis-invitation to the talks, and stayed home.

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