Gold Rallies As U.S. Dollar, Stock Futures Soften
(Kitco News) - Gold rallied Monday as the U.S. dollar and equities weakened, with market participants further encouraged after the metal held above chart support during a pre-Easter sell-off, traders said.
However, the early-day move occurred in exceptionally light volume with markets in many Western nations still closed for a long Easter weekend, traders pointed out.
“Obviously, there is weakness in the dollar,” said Phil Flynn, senior market analyst with at Price Futures Group. As of 8:28 a.m. EDT, the euro was up to $1.23393 from $1.23013 late Thursday ahead of a three-day Easter weekend in the U.S. and Canada. Meanwhile, the June S&P 500 futures were down 12.10 points to 2,630.90.
“Equities are a little soft,” said Kevin Grady, president of Phoenix Futures and Options. “We had a little profit-taking at the end of last week. Open interest [the number of open positions] was down a lot. The market still held some good levels.”
Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA, commented that overnight trading was thin with many European markets closed. He added that market participants appear more comfortable moving back into gold again after the market last week fell for three straight days but held well above chart support at the lows from March and February.
“For the beginning of the next quarter, the market is pretty comfortable with the lows we saw last week,” he said. Nabavi later added, “People are coming in with a more positive approach.”
Further, he said, there are signs of improvement in Far East physical demand.
Still, Grady added that he would not read too much into the early-Monday move since volume is so light with London markets still shuttered. “To be up $10, it’s a lot of algorithm trading,” he added.
Meanwhile, geopolitical risks are continuing to underpin gold, including potential for the U.S. to reintroduce some kind of sanctions against Iran, Flynn said. U.S. President Donald Trump has threatened to pull out of a three-year-old international deal over Iran’s nuclear program.
Also, pointed out Grady, Trump did more Tweets about trade over the weekend. The administration some time ago proposed tariffs on steel and aluminum imports. China now has upped the ante, responded by imposing tariffs of up to 25% on 128 U.S. goods.
June gold has ticked above the 20-day moving average around $1,333.10 and the 10-day average at $1,336.90. The metal is right around the 50-day average at $1,338.40.
Below the market, the 100-day moving average lies at $1,313.70 and the 200-day at $1,304.80.