It is Nice to See a Rally Not Based Upon Dollar Weakness

For the first time in a while gold is sharply higher and gains are not based upon a weaker US dollar. Over the last couple of months, the majority of trading days contained a net change in gold that was the direct result of dollar strength or dollar weakness.

As of 5:10 PM Eastern standard time gold futures, basis the most active April contract, is trading just off of the highs and up $10.90 (+0.84%)  fixed at $1324.80. Considering that the dollar index is currently down by a fractional amount, just over a 10^th of a percent, it is obvious that the vast majority of today’s gains are based upon traders bidding up the precious yellow metal.

The same can be said for spot gold which is currently up $8.90, and fixed at $1321.20 which is a net gain of 0.68% on the day. According to the KGX (Kitco gold index) only $1.30 of today’s gains are based upon dollar weakness, with the remaining gain of $7.60 directly attributable to buyers and bullish market sentiment.

In addition to this renewed and welcomed bullish sentiment, today’s gains in the precious metals complex are occurring in tandem with a U.S. equities market that had incredible gains on the day. The Dow Jones industrial average gained over 443 points today as it closed at 25,883.25. This was a net gain of 1.74% on the day. The NASDAQ composite exhibited gains of 6/10 of a percent and closed at 7471.75.

These strong gains witnessed in U.S. equities and the precious metals were a direct result of market sentiment based upon the trade negotiations between the United States and China that were reported as making headway and getting closer to a favorable resolution. While this news only had a minor impact on the U.S. dollar it had a profoundly strong impact on U.S. equities, and to a lesser degree a strong impact on the precious metals.

It was not only gold that had a substantial upside move in fact gold’s performance contained the smallest percentage gain today in the precious metals. Silver traded higher on the day gaining 1.48%, with March futures closing at $15.755, after adding a gain of almost $.23 in value.

Palladium was second in line in terms of percentage gains today, but first in terms of positioning as the most expensive precious metal, gaining 1.78% today and closing well above $1400 per ounce. In fact, March Palladium futures closed at a new all-time record high of $1410.60 after gaining $24.70 today.

However, it was platinum that exhibited the largest percentage gain on the day. After adding today’s gain of $19, a 2.41% gain, platinum futures are currently back above $800 at $808.20. Today was truly a remarkable day for the precious metals complex as a whole.

Wishing you as always, good trading,