Gold Retreats After failing To Overcome Critical Level
The largest percentage drawdown today occurred in palladium which had over a $100 trading range. Palladium opened two dollars off of its high at $1457.20 before plummeting and losing 6% in trading today. Palladium futures are currently down $86.80 and fixed at $1360.40.
Although silver only lost .93%, today’s $0.14 decline took the futures contract below $15 again and currently is fixed at $14.85.
Solid economic data out of China as well as mildly stronger U.S. equities were responsible for today’s declines in the precious metals. According to MarketWatch, “Monday data showing that profits at Chinese industrial firms grew for the first time in four months set a relatively upbeat tone for riskier global stock markets, nicking precious metals prices. Some strength in the U.S. stock market also helped to dull investor interest in gold.” Kitco
What is the Technical Charts saying?
GDP Numbers Show Gold Is Learning To Live Without U.S. Dollar: George Gero
Gold has been trending with the dollar in recent trading sessions, signaling a decoupling of the yellow metal’s traditional negative correlation on the U.S. dollar, said George Gero, managing director of RBC Wealth Management.
Gero said that this trend reversal may be caused by strong demand for gold outside the U.S., especially in countries that needed gold the most, like Venezuela, but could not afford it in U.S. dollar terms.
“It’s interesting that gold, in the just last few sessions, is learning to live with a strong dollar, and the reason for the strong dollar hasn’t really been the possibility that the Fed is going to hike rates again,” Gero told Kitco News. “Actually, traders are all keen on the next May 1st Fed meeting which could be very, very interesting for traders, to see if the fact that these strong GDP numbers today will bring back some talks about maybe, after all, there could be a rate hike.”
Gero added that a rate hike may not be likely, owing to the fact that most central banks around the world still have loose monetary policies, since a lot of these countries are not “booming” like the U.S – Kitco
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