Dollar Strength Continues to Weigh on Precious Metals Pricing

Gold, silver, and platinum have closed lower today. However, gold is the only precious metal to have any selling pressure. Traders have bid the precious yellow metal fractionally lower today (-$0.40). Both silver and palladium had fractional upside ticks in terms of the buy-side of the equation.

All four precious metals were weighed down today due to dollar strength. The net result was that three out of four closed lower on the day. The exception to this trend was palladium. Physical palladium is currently fixed at $979 per ounce, with a net gain of $7.00 on the day.

This information comes courtesy of Kitco Gold Index (KGI), which details net changes of precious metal pricing into its two primary components: dollar strength or weakness and buying versus selling.

Gold has now fallen for two consecutive days, trading to the lowest value in the last five weeks. The vast majority of recent losses can be directly attributed to dollar strength. The U.S. dollar index gained almost a half percent in trading today and is currently fixed at 91.385, after gaining 43 points in trading today.

Seven of the last eight trading days have resulted in higher values in the U.S. dollar index. After hitting a low of 88.49 on April 17, the dollar has climbed 336 points, a net gain of 3.3%. Dollar strength has been the primary cause of recent weakness in the precious metals complex.

Recent dollar strength has taken current pricing well above the former level of resistance at 91.00. This resistance level was taken out easily in trading this week, as the dollar has gained 1.2% of value since Monday.

In an interview with MarketWatch, Rob Haworth said, “Ultimately rising real interest rates in the U.S. and a stronger U.S. dollar are placing gold under pressure at month’s end. Should the stronger U.S. dollar trend be sustained, especially by higher real U.S. interest rates or rising expectations of additional Federal Reserve interest rate increases this year, gold prices may see further pressure into May.”

On a technical basis, there is minor resistance at 91.56, with major long-term resistance at 94.53. Major support for the dollar was formally at 88.58. However this week’s uptick has moved that support level to 91.00. The former resistance level has now become support.

Wishing you as always, good trading,