Hawaii Six O - Gary Wagner
Powell and Yellen conclude their two-day congressional testimony
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Today both Chairman of the Federal Reserve Jerome Powell and the secretary of the United States Treasury Department Janet Yellin completed their two-day congressional testimony. In short, their testimony resulted in dollar strength as it did yesterday. Also, unlike yesterday, yields in 10-year U.S. Treasury notes declined slightly. The 10-year note is currently fixed at 1.617%, after being fixed at 1.629% yesterday.
However, the key difference between the two days of testimony was that gold was able to overcome market forces creating strong headwinds and close higher on the day, which did not occur on the first day of testimony by Powell and Yellin.
As of 5:42 PM EST, gold futures basis, the most active April 2021 contract, is currently fixed at $1733.40, after factoring in today’s gain of $8.30 (+0.48%). Gains in gold pricing did not erase the 0.74% decline that occurred in trading yesterday. However, what was remarkable is that these gains occurred in conjunction with a stronger dollar.
The dollar gained +0.30%, which is a total of 27 points and is currently fixed at 92.62. This was the second consecutive day in which the dollar closed higher. Yesterday the U.S. dollar closed higher as the dollar index gained 62 points or 0.68% in trading.
The easiest way to illustrate the strong demand, which is the outcome of bullish market sentiment in gold against the tide of dollar strength, is to look at the KGX (Kitco Gold Index). According to the KGX, spot gold is currently fixed at $1734.60. This is a net gain in trading today of $6.90. However, dollar strength actually took $5 per ounce away from its value, but strong bullish market sentiment moved the precious yellow metal higher to the tune of $11.90, which is how gold ended up closing higher by $6.90 on the day when there was moderate dollar strength.
Silver continued to spiral to lower pricing, although in percentage gains, there was not the strong selling pressure which resulted in a 2.63% decline yesterday. Today the most active May 2021 contract currently is fixed at $25.19, which is a decline of only 0.18%. Spot silver actually gained $0.05 in trading today and is currently fixed at $25.07. Just as in gold fractional or moderate buying took silver pricing $0.12 higher, with dollar strength taking away $0.07 of those gains resulting in a net gain in spot silver today of $0.05.
One of the primary topics that are at the forefront of the minds of market participants shaping their market sentiment is that although the United States is showing some economic growth, Europe continues to be plagued with continued issues from the pandemic. Germany, as well as Poland, are currently back in lockdown stages as they try to get a handle on the pandemic. America is not an island, and although we are showing some economic recovery, a global economic recovery will be absolutely necessary for the American economy to thrive. We live in a global trading economy in which all countries, to some degree, are dependent upon other countries to continue economic growth and expansion. America’s economy can only recover to a certain degree without the rest of the world being able to accomplish the same.
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Wishing you, as always, good trading and good health,