Gold futures briefly eclipsed $3,500 per troy ounce yesterday before retreating as traders sold into the recent historic milestone taking gold lower, as well as a strengthening U.S. dollar. In addition, strong equities markets applied downward pressure on gold prices. However, the recent de-coupling of gold and silver prices continues to widen today with gold futures retreating by 2.67% and silver futures gaining 1.95%.
Yesterday, the most active June futures contract reached an unprecedented intraday peak of $3,509.90 during overnight trading before surrendering $43.10 (-1.25%) by the session's close. As of 5:35 PM ET, June gold is currently fixed at $3301.50 after factoring in today’s steep decline of $90.50, or -2.67%. Yesterday gold traversed more than $130 in a single volatile session after opening at $3,435.10, trading to an intraday high of $3509.90 before falling to $3392.
Despite gold breaching the former all-time intraday high yesterday, gold failed to sustain Monday’s record closing price of $3435.10. Nevertheless, the price-performance for gold this month could still be stellar with June futures opening at $3157.30 on Tuesday, April 1, and one full week remaining. Obviously, this depends on whether the price decline over the last two days will play out as a simple price decline in gold rather than the decline over the last two days signaling the beginning of a much deeper price correction.
However, it must be noted that gains in gold through the month of April have been almost entirely the net result of dollar weakness rather than market participants bidding gold price higher. The U.S. dollar's strong devaluation over this month has been the overwhelming primary force moving gold higher. Although the dollar has gained value after trading to a low just below 98 on Monday, dollar weakness over the month of April has added 4.277% in value.
Considering that June gold futures have gained approximately 4.56% this month, bullish sentiment only accounts for 0.29% of gold’s 4.56% gain this month. On Tuesday, April 1 the dollar opened at 104.131, and the index is currently fixed at 99.899. The last time the dollar index has been at this low of a value was in April 2022. This means that the dollar index has added 4.277% to the price of gold this month. The dollar index remains below a critical technical support level of 99.25 that was breached on April 16.
Editor’s note and update: gold opened in Australia 30 minutes ago (it is currently 12:30 PM in Hawaii) and is moving higher from the opening bid of $3301. Gold is currently trading between $3320 and $3325, substantially higher than the close in New York.
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