Dollar Beats Down Gold Again

It’s always something. The dollar returned in pure powerhouse mode today and everything in sight was beaten up, dragged around and kicked down the alley.

The dollar peeled $11.50 from the price of gold, even as regular trading was adding almost $5.50. The net in mid-afternoon trading is that gold is off $6. Not that it was alone in its dollar-driven drop.

The Dow was off 275 points and the S&P 500 entered negative territory for the year. European exchanges were also down on euro weakness. China’s equities tumbled on contradictory news concerning inflation. Consumer Prices were on target at about 1.4% annually, but producer prices were way down, -4.8% annually. That is a very big red flag because business margins may be affected drastically.

Maybe China is in a race to the bottom, not only with the rest of the world but with itself? There are still fears that China’s slowdown is not braking yet. Equities are also worried how long it will take Europe to register some real growth.

On the bright side, U.S. job openings – at 5 million – are at their highest in 14 years. Job openings rose 2.5% to their highest levels since January 2001, the Labor Department said Tuesday. (That was the month and year George W. Bush first took office.) The number of people who quit their jobs increased to 2.8 million, the most in more than six years.

More quits are generally a sign of confidence in the economy, because people typically dump their old jobs when they have new one lined up, often at higher pay, or are optimistic that they can find a new position.

Moreover, an increase in the number of openings is usually followed by stronger job gains. Steadier economic growth, powered mostly by consumer spending, has boosted business confidence thus making them more willing to hire.

One wonders where the so-called “discouraged” are vis-à-vis those 5 million open positions.

Crude oil prices were down sharply. Brent North Sea and West Texas Intermediate were both off about 3.45%. Of course, the drops spooked equities, especially the Dow. However, as an outside bearish factor, it did gold no good, at least taking the regular trading down enough notches so it couldn’t strike back against the dollar-strength losses.

Finally, all bond yields – Germany, Japan and the U.S. – were off to steady. That certainly doesn’t seem like a market afraid of a Fed rate hike in June.

So, if you got a dollar bill in your pocket, take a look at it. It’s the strongest it’s been in 12 years against the euro. Will there ever be parity?

It can’t come soon enough for gold.  As a side note, I will be presenting a live webinar tomorrow (Wednesday, March 11) at 4:30 EST. Please use this link to register  for this free live event.

Wishing you as always, good trading,