Gold Holds Steady as US Equities Surge to a New Record High

Gold prices hold steady, trimming losses from the strong sell-off that occurred in trading overseas last night and currently trading, in essence, unchanged. As of 3 o’clock Eastern Standard Time, spot gold is trading at $1236 - $1237, off about one dollar on the day. This is in tandem with the US equities markets trading to new historical highs following a global equities rally which took place last night.

Like a Salmon Swimming Upstream

Even though gold prices have nominally changed, closing flat on the day, a closer look reveals that a strong US dollar weighed heavily on gold prices, taking the price of gold down approximately 7 to 8 dollars on the day. However, investor interest in the precious yellow metal was able to almost compensate for the stronger US dollar. The US dollar is currently 4/10 of a percent higher on the day at 101.36 on the Dollar Index. The fact that gold was able to hold steady in light of a strong US dollar, with global equities in rally mode, is impressive.

France and the Fed

Outside factors contributing to this internal roller coaster ride include the current election in France and the Federal Reserve. According to MarketWatch, “Some market participants attributed gold’s improved trading level to recent polls that were showing far-right presidential candidate, Marine Le Pen, widening her lead ahead of France’s coming election.” At the same time, downside pressure can be attributed not only to dollar strength, but statements made by Philadelphia Federal Reserve Bank President Patrick Harker. In an interview to Market News International, Parker suggested that he would, “likely support an interest-rate increase at the central bank’s next meeting in March if he sees additional evidence that inflation is gaining momentum.”

Technical Levels

Based upon our technical studies, gold prices have strong resistance at 1242 and support currently is at $1220 per ounce. Over the last nine trading days, gold prices have attempted to breach the 1242 level unsuccessfully.

Wishing you as always, good trading,