Dollar Strength and Selling Pressure Continue to Weigh Heavily on Gold Pricing

March 28, 2018 - 6:24pm

 by Gary Wagner

Now for the second day in a row, gold continues to trade under pressure. Although yesterday’s price action contained a higher high then Monday, gold fell under pressure to close $11 lower on the day. Dollar strength and selling pressure not only continued but also accelerated today with gold losing 1.38% of value.  

As of 3:49 PM Eastern standard time, gold futures (April futures contract) are currently off by $18.50 (-1.38%) and fixed at $1,323.50. Like yesterday, today’s sharp decline is the outcome of dollar strength combined with selling pressure.

This combination can be clearly seen when looking at the KGX (Kitco Gold Index). Spot gold is currently trading at $1,324.20 which is a net decline of $20.30. Most of today’s price decline is due to a stronger U.S. dollar accounting for -$12.20, with the remaining -$8.10 directly attributable to selling pressure.

Market participants continue to focus on U.S. equities; the risk-on asset class continues to contain wild price swings with ultimate selling pressure outweighing higher pricing. The Dow Jones industrial average traded 220 points higher and 129 points lower in today’s trading before closing at 23,848.

Although the Dow was able to close unscathed and unchanged, it is still solidly in corrective territory, indicating a 10% decline from the recent highs.

The NASDAQ composite closed below 7,000 for the first time since February 9. Losing a little over 6/10 of a percent today, the tech-heavy index closed at 6,963.47, a decline of 46 points on the day.

Continued selling pressure in U.S. equities, as well the current conflict regarding trade and tariffs between the United States and China, could be a supportive factor for the safe-haven asset class. These concerns could, in fact, limit further decline in gold pricing.

Our technical studies indicate that there could be substantial technical support for gold prices at $1,317 per ounce. This price point contains a Fibonacci harmonic resulting from a long and a short retracement’s occurring at this price point. Both data sets include that price as a significant level: a 38% retracement from the large rally and a 78% retracement from the most recent short-term rally.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action

We pulled profits today when our stop was hit. We are currently flat with no active trades.

Long @ $1329 Out @ 1336 for a profit of $700 per Comex contract.

Gold Market Forecast

We have identified a Fibonacci harmonics at $1317. We used 2 data sets, both a long and short. The 38% retracement (Long) and the 78% retracement (short) both occur at $1317. Therefore we will look at that price point to re enter a long in the June contract month.