Hawaii Six O - Gary Wagner
Dollar Closes at Highest Level This Year
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
The U.S. dollar index scored a tremendous gain, breaking above resistance and closing at the highest price point of 2018. Gaining almost ¾ of a percent on the day, the dollar gained 0.679 points and closed at 95.025.
Today’s close is above all previous highs achieved throughout this year. On May 29, the dollar closed at 94.79, and on June 14 the dollar index closed at 94.77. These highs had been the highest trading points of 2018, and up until today, the dollar had never closed above 95 on the index in 2018.
These highs match highs in the dollar that were achieved in November 2017, which created the resistance at this level. However, even during November, the highest high the dollar closed at was 94.86. In fact, the last time the dollar index traded at or above 95 was in July 2017.
On June 7, a “golden cross” pattern was completed. This pattern is created when the short-term 50-day moving average crosses above the longer-term 200-day moving average. This pattern is interpreted by technical analysts as the point in time in which a short-lived rally morphs into a long-term trend.
Because gold is paired with U.S. dollars, there is an intrinsic high negative correlation between the dollar and gold. Therefore, recent dollar strength will naturally place dynamic pressure on gold, taking that precious metal lower.
Gold has been trading under pressure since reaching the apex this year at $1,370 per ounce during the second week of April. Since that time, it has been trading lower. Monday’s lower prices resulted in the completion of a “death cross.”
Since Monday gold has closed lower, today marking the third consecutive day. The majority of gold’s lower pricing is a direct result of dollar strength. Today physical gold closed down $6.80 and is currently fixed at $1,251.80. On closer inspection, traders actually bought the precious metal, bidding it higher by $1.50. However, dollar strength resulted in a decline of $8.30 per ounce, according to the Kitco Gold Index (KGX).
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Wishing you as always, good trading,