Opinion with Peter Hug
Dollar Has Minor Bounce, Gold Has Minor Reversal
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
(Kitco News) - Gold failed to push through the $1,212 level yesterday as the dollar regained some strength. Dollar was up .5% and gold down .5%. With the loss of momentum at the $1,212 area yesterday, traders took some money off the table from gold’s recent 3% bounce. Until we see a significant change in perception, gold will continue to struggle to regain recognition as a necessary short-term hold.
With the continuous move higher in the equity space and yields finally offering returns (albeit pathetic) in the bond market there is no sense of urgency to participate in the gold market. The yield differentials continue to favor the dollar. We are not in the camp of a sustainable upside to the equity market and think the Fed will likely take a step back, after the September meeting, which may suggest a weaker commodity space coming into the meeting, with a rally following the rate increase. Gold should remain somewhat contained going into the long weekend.
We see some volatility into Thursday and then a muted market, as the players take one last soak in the sun before business revs up in September. The $1,200 level should provide some minor support, with $1,212 the level that may encourage the shorts to square some of their book.