Equal Parts of Weak Dollar and Selling Pressure Leave Gold Unchanged

March 12, 2018 - 5:36pm

 by Gary Wagner

Selling pressure in gold, as well as a strong U.S. dollar, have canceled each other out to leave gold unchanged on the day. As of 3:30 PM Eastern standard time, April gold futures are currently unchanged and trading at $1,324 per ounce.

Spot gold is currently fixed at $1,322.90, which is a net loss of $0.20 on the day. According to the Kitco Gold Index, a weakening U.S. dollar is adding $3.40 value today, while selling pressure has resulted in a decline of $3.60.

The U.S. dollar is currently trading down -0.22% at 89.87, which is a net decline of 195 points on the day. Dollar strength or weakness will be a significant determining factor in gold pricing.

Gold prices continue to react to Friday’s jobs report which came in at over 300,000 new jobs added. The robust numbers from this report continue to fuel a risk-on environment in equities across the globe. Strong numbers in Asian and European equities did not completely transfer over into U.S. markets this morning.

In an interview with MarketWatch, Craig Erlam, senior market analyst at OANDA, said, “The numbers we saw on Friday provided the perfect balance of strong job creation and softer wage growth, which does not necessarily trigger faster rate hikes. The much higher participation rate was a clear reminder that, while unemployment is at a 17-year low, there is still some slack in the economy which may take longer to sort out and explain why wage growth and inflation is so muted.”

Although the NASDAQ composite is trading up 35 points today at 7,595, the Dow is trading under moderate pressure. It is currently down 103 points at 25,233, with 21 minutes left in the trading day.

Very little has been said about the repercussions of the initiation of steel and aluminum tariffs, set to begin in approximately two weeks. With warnings from both China as well as the European Union, this issue could certainly heat up global economic tension in the weeks ahead. The Canadian prime minister is meeting with the U.S. president today and has asked for their tariff exemptions to be a permanent fixture rather than a temporary exemption.

Our technical studies indicate major support in gold at approximately 1,302. This is the 50% retracement of the rally which began in December 2017 and concluded in January when gold reached the first of a double top at 1,365.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

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Last week’s jobs report along with the announcement by trump to impose steel and aluminum tariffs are still being digested in the markets. Also, it was just announced that the budget deficit for the US has grown to the biggest deficit since 2012 and tax revenue in down, could dramatically influence the market. CPI numbers are due out this week.