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Dollar Has Minor Bounce, Gold Has Minor Reversal

Commentaries & Views

(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.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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