Gold Prices Pressured by Dollar Strength

January 24, 2019 - 5:08pm

 by Gary Wagner

Strong upside gains in the dollar index added pressure to the precious metals market today, with the exception of platinum. Currently the dollar index is up .53% (+0.503 points), and fixed at 96.275.

Dollar strength is the main catalyst for lower pricing in gold today. According to the KGX (Kitco gold index) market participants bid spot gold higher today resulting in gains of $4.50. However, after factoring in dollar strength which took away $7.30 worth of value, spot gold as of 4:16 PM Eastern standard time is currently trading down by $2.80, and fixed at $1279.50.

Gold futures are also experiencing lower pricing today with the April 2019 Comex contract currently fixed at $1285, a net decline of $5.20 on the day.

World Economic Forum Experts Warn of an Economic Slowdown in the U.S

Financial experts debated the economic outlook for the United States at the World Economic Forum Annual Meeting at Davos, Switzerland today.

They warned that the US economy could slow down to a crawl. This warning suggests that there is a serious risk that the US economy will experience zero growth. These concerns are based upon the current government shutdown, the trade war between the United States and China, as well as issues for a workable resolution to Brexit.

Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University said, “The shutdown, if it continues, will be very problematic. The estimate of zero growth is not crazy at all,” 

Goldman’s Commodities Chief Bullish on Gold

As reported by MarketWatch today, “In an interview Goldman Sachs’s head of commodities research, David Currie, laid out their three reasons for a bullish view: fear of recessionary risks still make it a good hedge against those possible economic problems; a weak dollar improves the purchasing power of emerging markets, with China and India expected to fuel even more physical demand; and signs of more central-bank buying, from India, China and emerging markets. Goldman has a 12-month gold forecast of $1,425 an ounce, which is also a fair pace from the current $1,278.40 level”.

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
Thursday morning, January 17, we sent out a ...TRADE ALERT: to sell (cover) our long Feb gold @ $1289.90 and to REMOVE the STOP
 In at $1268.59 out @ 1289.90 for a profit of $2140.00 per contract
We also Bought April Gold @ Market and Placed our Stop at $1283.13
That stop was hit on Monday January 21 for a loss of  $11.87 or $1187 per contract.
Gold Market Forecast
All week we have been speaking about the $64,000 question - whether or not this recent price decline in gold is signaling a shallow and quick selloff, or an indication that a correction has begun which will take pricing lower.
 If we see support continue at the lows achieved yesterday we will issue a by signal in this area. However currently we have seen no technical indication of support.