The Year of the Dog Begins and Gold Gains 3% On the Week

The Chinese New Year, also known as the Spring Festival, begins today and formally initiates the Year of the Dog. Trading was quiet in Asia as markets closed in observance of this holiday.

Substantial weekly gains characterize gold pricing as the U.S. dollar index lost ground throughout the trading week. Gold futures (April 2018 contract) had significant gains, trading from the lows on Monday at $1317 per ounce to its current pricing at $1351.20. Gaining approximately $34 in trading this week, the vast majority of those gains were the result of a sizable upside spike on Wednesday which added over $20 in value, with a range of $39.

This week gold prices saw steady price increases beginning on Monday with spot gold gaining roughly $8.00, the result of a combination of four parts buying (+$4.35) and three-parts dollar weakness (+3.55). On Tuesday gold prices continue to move higher, resulting in a six-dollar price gain which was almost 100% due to dollar weakness.

Although dollar weakness certainly provided substantial tailwinds taking gold prices higher, gains from Wednesday's strong uptick were the direct result of traders bidding up the precious yellow metal. Spot gold gained roughly $24.60, with $15.80 directly attributed to regular trading and the remaining $8.80 because of a weakening U.S. dollar.

Thursday provided modest gains adding roughly $3.80 in value. However, yesterday’s action was all about dollar weakness which contributed $6.60, as buyers sold into the gains of Wednesday resulting in -$2.80.

Gold gained value for the first four days of the week and today is softening slightly to close at $138.40, giving up approximately $4.90 in value. On closer inspection, today’s lower pricing was all about dollar strength with gains of $3.60 attributed to normal trading and $8.50 contracted is a direct result of solid U.S. dollar performance.

According to MarketWatch, “Spot gold has risen 3.2% so far this week, putting it on track for its biggest weekly rise since April 2016.”

The financial markets will be closed on Monday in observance of Presidents’ Day. Today marks the beginning of the Chinese New Year for 2018, the Year of the Dog. These two events could undoubtedly mute any action which could limit trading volume and price action over the long three-day weekend.

Wishing you as always, good trading,