Gold Unable to Hold onto Yesterday's Price Gains
Anyhope for potential support and subsequent reversal in gold was short-lived as astrengthening U.S. dollar and a predominantly bearish sentiment took priceslower today. Gold futures are currently trading off by nine dollars to be fixed at $1,324 per ounce, a net decline of-0.67%.
Exceptfor palladium, precious metals are trading lower today across the board.Physical palladium is trading unchanged on the day. A decline of $4.30 due to astrengthening U.S. dollar was compensatedentirely by buyers bidding up palladium by that exact amount.
Gold,silver, and platinum were lower today.Platinum suffered the most significantdrawdown to lose $21 of value today, a 2.26% decline. This decline wasprimarily due to selling pressure, which accounted for $16.90. The remaining$4.10 drop was because of dollarstrength.
Sellingpressure in both gold and silver only counted for about 20% of today’s decline,with the remaining 80% attributable to dollar strength. Although multipleanalysts look at today’s decline as acombination of rising rates and a strongerdollar, it is the rising rates that arethe catalyst for dollar strength.
In aninterview with MarketWatch, Edward Meir, independent commodity consultant forInternational FCStone said that he believes gold “will have difficulty withstanding what we see as a risingtrend in both the dollar and U.S. Treasury rates and see both pushing higher atleast going into Friday’s key Q1 GDP reading.”
Higherinterest rates can affect gold prices in both directions. First, as interest rates pick up, higher yieldstemper the appeal of a nonyielding asset class. At the same time, higher interest rates create greaterinflationary pressures which can heighten interest in gold, which traditionallydoes well during periods of high inflation.
Gold Prices Near FirstSupport Level
OurFibonacci based technical studies indicate two levels of support for gold. Thefirst level of support (minor) is at $1,318 per ounce. Major support can be found at$1,303 per ounce, which matches the lows traded to on March 1.
Resistanceoccurs at $1,336 which was the opening price for gold on Monday. Major resistanceresides at $1,365, the brass ring in terms ofgold pricing that continues to be unbreakable and unsustainable.
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By Gary WagnerContributing tokitco.com
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gary@thegoldforecast.comwww.thegoldforecast.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.