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Gold Recovers as the Dollar Weakens

goldGold futures have been benefiting from a weakening dollar. The yellow metal hit a low last week then recovered Thursday afternoon as the dollar weakened overnight. Still the bullion is vulnerable to further losses.

As of 12:30 pm EST, spot gold (XAU/USD) was trading at $1,330.91 per ounce. U.S. gold futures, for February delivery, lost 0.59 percent to $1,331.30 per ounce.

In Wednesday’s session, spot futures lost 0.8 percent. This was its worst one day percentage decline since December 7. This came as the dollar recovered from a three year lows.

The US dollar index reversed course and fell lower. Investors are looking to diversify their dollar portfolios in other currencies including the yen, euro and Australian dollar.

Gold could be Vulnerable to More Losses

Technically speaking, XAU/USD should fall to $1,311 per ounce. It has now broken a key support at $1,329.

Also to note, a correction in digital currencies could support gold. An analyst from ANZ bank said, in a note, that “brokers in Europe report investors have increasingly been asking about switching from cryptocurrencies into gold.”

Looking at other precious metals, silver shed some gains to trade down to $17.01 per ounce. Palladium tumbled 1.1 percent to $1,102.97 per ounce.

Platinum rose 0.91 percent to $1,005.80 per ounce. This comes after reaching its highest price point since September 8 at $1,007.60 on Wednesday.

Over the las 15 years, platinum has moved higher in January and February. This is thanks to weaker supply from South Africa. We are seeing this now but there is also some short covering happening in the market to make up for gains.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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