Gold Price Up, At 3-Wk High, On More Safe-Haven Demand, Weaker U.S. Dollar
New York (Mar 22) Gold prices ended the U.S. day session modestly higher and hit a three-week high Wednesday, on some more safe-haven demand amid a shaky U.S. stock market at mid-week. A weakening U.S. dollar index recently is also working in favor of the precious metals market bulls. April Comex gold was last up $3.00 an ounce at $1,249.50. May Comex silver was last down $0.018 at $17.57 an ounce.
An apparent terror attack near the Parliament building in London that killed at least one person did not have a significant impact on the marketplace. Details of the event were still unfolding as of this writing. Markets have become mostly desensitized to such terror events and consider it an unfortunate part of modern day life now.
Focus of the world marketplace is turning to a Thursday vote by the U.S. House of Representatives on a bill to abolish the Affordable Care Act, also known as Obamacare. There are now some serious doubts whether the Republicans can muster enough votes to strike down Obamacare. A failure of the House to repeal Obamacare would throw into serious question President Trump’s ambitious pro-business plans of cutting taxes and regulations. Trump’s aforementioned agenda being successfully moved through the U.S. Congress in the coming few months had been the cornerstone of the U.S. and world stock markets’ rallies that began in early November.
Precious metals traders should also take note of the developments in the U.S. stock market Tuesday. The S&P 500 stock index futures saw a technically bearish downside “breakout” from a sideways trading range, which produced the most near-term chart damage the index has seen in months. Tuesday’s bearish price action is a technical clue the S&P has put in a near-term market top. Money flows had been heavy into the U.S. and other world stock markets since early November. Many veteran traders and investors had been looking for a good-sized corrective pullback in the stock indexes for some time. Is this the beginning of that big downside correction? Has the “Trump trade” finally faded? It’s too soon to say with much confidence, but by the end of trading on Friday, better conclusions can be made on the matter.
If the U.S. and world stock markets do embark on serious downside corrections, such would have significant implications for other markets, including the precious metals. Gold and other raw commodity markets, as well as government bonds, could all benefit as the all-important money flows would move away from equities and into other asset categories.
The key outside markets on Wednesday saw the U.S. dollar index trading lower and hit another six-week low. The greenback bears have technical momentum as prices are in a fledgling downtrend on the daily bar chart. Meantime, Nymex crude oil prices were lower and hit a four-month low overnight, amid the bearish specter of growing world oil supplies, especially ramped up U.S. shale-oil production. The crude oil bears have the firm near-term technical advantage.
Source: Reuters
