Many will wonder with all the market turmoil why the price of gold futures has not also risen commensurately over the last few sessions. The issue here is with the pressure of the U.S. Dollar. As the currency of last resort, the U.S. dollar has seen recent strength as global equity markets tanked on Friday and Monday. While the equity markets faltered, the US economy remains strong despite a growing trade deficit, further supporting the dollar. Gold typically has an inverse relationship with the U.S. dollar, as the dollar gains gold will wane.
Other metals faired much the same as gold as March silver futures settled down to $16.580 a troy ounce, April platinum futures dropped to $994.30 a troy ounce, March copper futures settled down to $3.1890 per pound, and March Palladium futures fell to $1,002.50 a troy ounce.
For April gold, an open in the next session above the pivot of $1,338.33 would show near term resistance at $1,340.47 while a breakout above this level would see longer term resistance at $1,351.43. An open below the pivot would have near term support down at $1,327.37, and a sell off below this would show longer term support at $1,325.23.
Bullion on Bullion.
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Michael Bullion, CAIA
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RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.