The US dollar firmed up across the board and I think that is the main reason. With the softer US equity markets and the ongoing trade war between the US and China, you would think it would provide some support for gold and silver but that has not been the case.

“The further escalation of trade war is mutually destructive given the higher US consumer prices as a result of import tariffs, which in turn could fuel the risk of a faster-than-expected Fed rate hike in the foreseeable horizon,” OCBC said in a note.

A stronger dollar and higher interest rates reduce demand for non-interest bearing gold as the metal becomes more expensive for holders of other currencies.

Spot gold may break a support at $1,237 per ounce and fall more towards the next support at $1,226, Reuters technicals analyst Wang Tao said.

In other precious metals, silver was 0.2 percent higher at $15.78 an ounce. It fell to its lowest since mid-December at $15.72 an ounce, earlier in the session.

At this time, the market is still weak trading beneath last month’s low. Taking a broader view, this market is in a downward trend on all our indicators.  On the subject of the direction of this trend, we have been moving down for the past 2 months and the last monthly level low was 104540, which formed during December 2015 and generated a  new sell signal the first week of May.

Critical support still underlies the Gold market at 1238.20 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible.

Mr. Nespoli has been in the investment industry as a broker, registered investment advisor, and financial publisher since 1985. He has authored over 200 financial publications, over 31,000 buy & sell trade charts, and served investors in 35 countries.

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