Gold Trades Slightly Lower in Subdued Trading

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As of 5:15 Eastern Standard Time, gold futures are fixed at $1,242.80, which is a net decline of $3.80 (-0.31%) on the day. After trading above $1,246 yesterday, gold pricing found resistance at the 50% Fibonacci retracement and began to trade lower.

Spot gold was also marginally lower in trading today and currently fixed at $1,236 per ounce. The decline of $1.10 today is mostly the result of a strengthening U.S. dollar which is accounting for one dollar of today’s decline. The remaining $0.10 is directly attributable to selling within the spot market, according to the KGX (Kitco Gold Index).

Most of the financial markets, specifically U.S. equities, were closed today in response to a national day of mourning for former President George H. W. Bush. After yesterday’s dynamic selloff in U.S. equities and continued weakness in global equities, we could see gold continue its ascent in trading on Thursday and Friday.

The key events that traders will be watching will be the Labor Department’s jobs report on Friday, as well as any new developments in Brexit.

In an interview with MarketWatch, Naeem Aslam, chief market analyst at Think Markets UK said, “Traders are watching two important events in the coming days,” the ongoing developments on Brexit and how this factor can trigger a bigger move in the market and Friday’s U.S. nonfarm payroll data. If the Brexit vote is not approved, this will be a risk-off event for the market and we could see the price of gold moving higher,” he said. “Similarly, a soft U.S. NFP reading will only add fuel for this rally.”

Most importantly, market participants will be looking closely at the U.S. dollar to see if recent weakness is signaling a change in direction from extremely bullish to bearish. Precious metals pricing has had to fight an uphill battle to gain any ground because of recent dollar strength.

Palladium Bucks The Trend

One market bucking the trend has been palladium, which is the only metal out of the precious metal group to mark price gains in trading today. Currently, palladium futures are up $2.20 and fixed at $1,182 per ounce. As we have been speaking about over the last three weeks, it seems likely that palladium prices will come to parity with gold. Many analysts, including myself, believe that palladium pricing will actually overtake the price of gold. The supply-demand scenario favors higher pricing.

Wishing as always, good trading,

Gary S. Wagner - Executive Producer