Gold Futures Close Below $1,200

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Gold pricing took a moderate hit today with the most active December Comex contract losing $9.40 to be currently fixed at $1,198.80 per ounce. After trading to its highest level this month when gold traded to $1,218 yesterday, a surge in dollar strength today put dramatic pressure on gold pricing. Once again, gold futures closed lower on the week, posting a fractional decline of about one dollar.

As of 4:35 PM Eastern standard time, spot gold is trading at $1,193.80, after subtracting a net decline of $7.10 on the day. Most of the lower pricing today is directly attributable to dollar strength, which took away $5.20 in value. The remaining loss of $1.90 today was a result of selling pressure.

Dollar strength was a direct result of favorable economic data. A Federal Reserve report released today revealed that industrial production rose 0.4% in August. This was above expectations by about 0.10% and marks the third consecutive monthly increase.

The U.S. dollar is currently trading at 94.96, which is a net gain of 44 points on the day (+0.47%). Favorable economic data was highly supportive of the dollar today. As reported in MarketWatch, “The University of Michigan’s consumer sentiment index for September climbed to 100.8, compared with expectations of 97, marking its second-highest reading since 2014.”

According to MarketWatch, over the past year output is up by 4.9%. “Capacity utilization rose to 78.1% in August, the highest rate since April. The capacity utilization rate reflects the limits to operating the nation’s factories, mines, and utilities. It is still below pre-recession levels, above 80%, that could fan production costs and prices.”

According to Bloomberg, ‘President Donald Trump instructed aides on Thursday to proceed with tariffs on about $200 billion more in Chinese products despite his Treasury secretary’s attempt to restart talks with Beijing to resolve the trade war,’ according to four people familiar with the matter.”

As has been the case over the last few months, it is dollar strength or weakness that has been the most significant underlying factor moving gold prices. All eyes next week will be focused towards the trade relations between the United States and China looking to see if the two superpowers move farther away from a trade dispute, and closer to a trade war.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer