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

Commentaries & Views

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 10th 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.

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Wishing you as always, good trading,

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.