Risk-On Sentiment and a Firm Dollar Keep Pressure on Gold

A combination of an active U.S. equities markets, coupled with a firm dollar, has kept gold pricing under pressure. Today the NASDAQ index has traded to a new all-time high. As the trading day comes to close, the tech-heavy index is currently up about ¾% and trading at 7,780.92. The Russell 2000 index, composed mostly of small-cap stocks, is also showing moderate gains today of approximately ¾%. In fact, except for the Dow, all of the major indexes are higher.

As reported by Reuters, "The Nasdaq touched a record on Wednesday, lifted by a climb in large-cap tech and consumer discretionary names, while the Dow and S&P 500 were hemmed in as concerns over an escalation in the U.S.-China trade spat simmered. The S&P 500 was poised to snap a three-session losing streak, as gains in media stocks helped send the consumer discretionary sector up 0.7 percent.”

These gains in U.S. equities obviously indicate that market sentiment is favoring the risk-on environment as gains continue to mount. This, in turn, has created selling pressure in the safe-haven asset class with gold losing almost 6/10 of a percent on the day.

Currently, gold futures are trading at 1,271 (August 2018 Comex contract), down $7.60 on the day. Silver and platinum, with their industrial component, are actually exhibiting modest and fractional gains before we factor in the dollar component. 

Platinum has gained three dollars in trading today, which is composed of a net gain of $3.80 due to traders bidding up the precious metal, and -$0.80 to reflect dollar strength, resulting in a net increase of three dollars on the day to be currently fixed at $870 per ounce.

Silver is unchanged on the day and currently fixed at $16.27 per ounce, with equal weighting of buyers (+$ 0.01) and dollar strength (-$ 0.01), canceling each other out.

Spot gold is currently fixed at $1,268.70, after today's $5.70 decline. Today's lower pricing is a combination of mild dollar strength accounting for a -$1.40 decline, and -$4.30 which is the result of traders selling.

On a technical basis, the next real level of support occurs at $1,267, which is the 0.78% retracement of the December - January rally which took gold pricing from $1,240 to a high of $1,365 on January 25. This corresponds to a series of lows which occurred in October and November of last year right around that price point. A break below $1,267 could indicate a clear path to $1,240, corresponding to the lows achieved in December of last year.

Wishing you as always, good trading,