Dollar Strength and Solid Risk-On Market Sentiment Weigh on Gold Prices

February 5, 2019 - 5:36pm

 by Gary Wagner

A combination of dollar strength this week coupled with solid performance in U.S equities have created pressure in the safe haven class limiting any real upside move for gold pricing. In fact, the risk on market sentiment is not solely based in U.S equities but rather spread globally as world equities have reached a two-month high in trading today.

According to Reuters, “World stocks raced to a fresh two-month high on Tuesday to keep up their fast start to 2019 while the U.S. dollar strengthened for a fourth straight session as investors looked toward an annual address by the U.S. president later in the day. With European shares rising sharply, MSCI’s gauge of stocks across the globe gained 0.44 percent, increasing for a sixth straight session as it hit a two-month high. Wall Street’s main indexes were modestly higher in afternoon trade, paring stronger initial gains.”

These two factors combined have put modest pressure on gold futures. As of 4:50 PM Eastern standard time, the most active April futures contract is trading unchanged at $1319.30. At the same time spot gold is currently showing gains of three dollars on the day. Although dollar strength has taken away $3.50 worth of value today, market participants have been bidding up spot gold adding $6.50 worth of value resulting in the precious yellow metal gaining three dollars in the physical market. Gold futures as well as physical pricing seems to be extremely resilient and after retracing ever so slightly from the highs reached last week in gold futures at $1330 has been finding solid footing and support.

Palladium Regains Top Position in Precious Metals Pricing

Although we have seen gold, silver, and platinum trade under pressure recently the same cannot be said for palladium which is once again overtaken the price of gold and is become the most precious metal in the precious metals complex.

Currently Palladium futures are trading up $16.70 on the day, which is a net gain of 1.26%, and fixed at $1347.20 per ounce. Clearly palladium is trading head and shoulders above gold pricing. After hitting a high just shy of $1400 per ounce on January 17th, palladium prices sustained a very shallow correction trading just below $1300 per ounce on January 24th before staging a recovery. Since the last week of January palladium has been steadily gaining ground and with today’s $16 plus gain has returned as the top tier precious metal.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action
We are currently Flat with no active trades. We are looking for the proper place to re-enter the market from the long side.
On Sunday, January 27,  we sent out a trade alert to buy April Gold
Friday we sent out a trade alert to raise stop to $1317.00
We took $1000 profit per contract when our stop was hit on Sunday
Gold Market Forecast

Late last week we saw signs of a potential conclusion the the rally which began at $1200.00. We raised our stop to lock in profits. On today's report we will continue to look a proper placement for our next trade. To determine our next entry level is the key.