Dollar Pressure, Truce Drive Gold Lower
Today’s Spotlight Market
Gold futures have seen a weakness recently, as a flurry of negative data has pressured prices. The US Dollar Index continues to climb due to trader expectations of a rate hike in 2015 and the ECB slashing rates. The strength of the greenback has certainly played a role in weak commodity prices, but it is not the only reason commodity prices have been trending lower. Bumper crops in the major grains and a healthy supply of Crude Oil could hold back Gold prices, even if the Dollar regresses.????? ?
Fundamentals
In addition to currency machinations and outside resistance from commodity prices, geopolitical factors have been negative for Gold prices. The truce between Ukraine and Russia has held up to this point. While precious metals have seen spurts of buying interest in recent months due to flare-ups in various geopolitical hotspots, the trend among traders has been investors lightening their positions in favor of better performing assets.?
There is not an overwhelmingly bearish sentiment among metal traders; rather, they appear to be tired of seeing the stock market hit new record highs, only to be stuck in a commodity that has largely been sitting in a holding pattern.? India and China have also seen dramatic reductions to imports of the metal.? Stronger US economic data has also reduced the flight-to-quality demand for precious metals.? The ISM reported the biggest jump in manufacturing in more than a decade, and the labor market continues to show steady progress. ?
Technical Notes – View Today’s Chart
Turning to the chart, we see the December Gold contract approaching the low end of the trading range near the 1240 mark.? Failure to hold here suggests prices could test support at the 1200 level, which is a very important price point, both technically and psychologically.? If prices rebound here, Gold could very well see a continuation of range-bound trading for the foreseeable future.? The RSI indicator is showing oversold levels, which could be supportive in the near-term.
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