Gold Bounces On Near 1% Drop In Dollar

The U.S. dollar fell against a basket of world currencies as news from Europe prompted some analysts to guess that the Greek debt crisis will be resolved within the framework of the union.

The dollar also dipped close to 1% on a bump in weekly unemployment benefit claims and a surprisingly large dip in new-home sales in the U.S. New-home sales had been thriving. The decline was 11.4% against a rise in February of 7.8%, the highest in seven years. The numbers are hard to reconcile with the release of yesterday’s data regarding existing-home sales, which rose about 16%.

Home builders’ stocks tumbled on the new-home news, which put a bit of a damper on the Dow and S&P 500, both of which managed to move up, the latter to new record territory on intraday trading. The NASDAQ also moved into new record high territory.

$9.10 of today’s gain in gold and 0.12 cents in silver was due to dollar softness. Regular trading saw a decline of about $1.20 in gold and 0.04 cents in silver. 

Money was moving into the euro, the yen, Swiss franc and crude oil. The bond market was muted.

Both West Texas Intermediate and Brent North Sea were up to the tune of approximately 3% today, although the dollar decline and temporal influences like the continued Saudi bombing in Yemen had outsized influence. We’re still looking at $60 to $65 per barrel later this year, if it even goes that high (WTI, that is).

Equities are still attractive to investors on better-than-expected earnings news.

"Earnings for the most part have come in better than expected," said Ryan Larson, head of U.S. equity trading for RBC Global Asset Management (U.S.). “Despite headwinds from the strong dollar and low oil prices, companies have mostly delivered on expectations, which has led credence to the U.S. market that we're able to move higher from here."

The only dark clouds for U.S. equities happen to be located over Europe and China. China’s manufacturing index is actually contracting and Europe’s is only barely expanding. The higher U.S. dollar has done neither area any good.

But, we glanced at the VIX earlier today, which shows volatility has been picking up recently, although it was subdued today.

That means markets are “orderly,” which is not good for precious metals bulls.

Wishing you as always, good trading,