Gold Prices Drop As Dollar Gains Traction

New York (Oct 2)  The initial push lower for gold at the beginning of last week was the result of a decrease in rhetoric between the U.S. and North Korea. The dollar began to reverse its recent downtrend when news broke that direct communication between the U.S. and North Korea had been initiated. President Trump tweeted on Sunday that talks should be suspended with “rocket man,” as he believed they would prove worthless. The primary catalyst for weaker gold prices continues to be the bounce in the dollar, which was aided by speculation that President Trump may be considering Kevin Warsh, a former Federal Reserve president, as a replacement for Fed Chair Janet Yellen. Warsh is viewed as  more hawkish than Yellen.

The weekend referendum by Catalan, Spain’s richest economic region, for independence put pressure on the euro, as traders try and assess the economic implications for Spain. Gold’s break below the $1,285 area suggests technical damage, which brings in the $1,265 support line. A close above the $1,278 level is needed to neutralize the recent selling.

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