Gold retraces modestly as dollar strength dampens any daily gains
Gold futures are trading modestly lower with dollarstrength being the primary force taking the precious yellow metal lower. As of4:45 PM EDT gold futures basis most active December 2021 contract is down twodollars, or -0.11% and is fixed at $1782.10. Concurrently spot or Forex gold iscurrently jumping between fractional losses and fractional gains. Currentlyspot gold is fixed at $1,782.55 approximately +0.05% or one dollar on the day.
Considering that the dollar is currently up just over 1/4 % itis clear that any decline today can be directly attributed to a strongerdollar. Currently the dollar index is up 25 points, or +0.27%, and fixed at93.785.
Looking at a daily candlestick chart we can see that goldis currently above its opening price. Gold opened trading at $1782.50 andtraded to a high of $1790.40 and a low of $1776.80. That means when compared toyesterday's trading range gold has had a higher high and a higher low, althoughit closed just below Wednesday's closing price.
Gold did not have much competition from either U.S. stocksor cryptocurrencies. In the case of the cryptocurrencies, after hitting anall-time high yesterday Bitcoin futures declined by almost 6% ($3,980) and arefixed at $62,685.
After launching the first Bitcoin futures ETF yesterday,ProShares Bitcoin strategy (BITO) declined by 5.61% with the ETF currentlypriced at $40.64 per share.
U.S. equities were mixed with both the NASDAQ Composite andStandard & Poor's yielding moderate gains today. The NASDAQ gained +0.62%,and after factoring in today's gain of 94.0217 is currently fixed at 15,215.70.The Standard & Poor's 500 gained 13.59 points, or +0.30%, and is currentlyfixed at 4549.78. The Dow Jones Industrial Average closed, in essence,unchanged with a decline of -0.02%, or a loss of 6.26 points, and is fixed at35,603.08.
According to Reuters News, today's fractional decline ingold prices was a result of choppy trading as the precious metal continues tobe pressured by rising yields on U.S. bonds. However, gold prices weresupported by reports about China that indicated that they are also experiencingupticks and inflation and an extremely troubled real estate(housing) market.
Reuters also spoke to Phillip Streible, Chief Market Strategistat Blue Line Futures in Chicago who said, "The Fed is going to taper andyields are going to make an all-time high so there is no reason for people topark their money in a nonyielding safety asset like gold."
They also spoke about the double-edged sword that isinflation, Federal Reserve actions as inflation rises (a bullish component forgold prices) reduce stimulus coupled with higher interest rates which willreflect higher yields on U.S. government debt instruments will raise theopportunity cost of holding nonyielding bullion (a bearish component for goldprices).
It seems for the moment until the Federal Reserve convenesfor its next FOMC meeting on November 2, gold will continue to trade in a range-boundmanner reflecting the dynamic crosscurrents. Dollar strength and higher yieldsin U.S. debt will continue to pressure gold lower, and inflationary concernswill continue to be supportive of gold prices.
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Wishing you, as always, good trading and goodhealth,
By Gary WagnerContributing tokitco.com
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gary@thegoldforecast.comwww.thegoldforecast.com