Gold Prices Fall Folowing Rising U.S. Dollar

(CEP News) - A stronger U.S. dollar is taking some of the wind out of the gold rally, says some commodity strategists.

The U.S. dollar index reached a three-year high at the start of the North American session, at 89.456.

At the same time, gold fell sharply, trading inversely to the movements off the U.S. dollar. In overnight moves, CBOT spot prices hit a session high of $942.24 an ounce. However the strength was short lived and prices remain near the session lows.

Jimmy Tintle, futures broker at Transworld Futures.com said he is very bearish on gold prices and is looking for prices to drop to $850 before rallying back to recent highs.

The outlook for gold still remains weak according strategists from Barclays Capital. the pointed out that Jewelry sales in Indian and Abu Dhabi continue to drop and although, investor interest remains “buoyant,” it is still down from the highs in January and February.

“Tactical investors have liquidated long positions but still maintain a positive outlook,” they said in a note to clients.

Mike Glaser, futures broker at LaSalle Futures said he still sees support holding at $900.

WTI Crude oil is up $1.71 to $47.23 while ICE crude oil is trading down $0.57 to $44.28.

Meanwhile, ICE RBOB gasoline futures are up $1.95 to $133.22 and Globex natural gas is unchanged at $ 1.26. Heating oil at the ICE is up $6.96 to $122.94.

In the mining sector, spot gold is trading down $24.31 to $915.04 USD. In Canadian dollars, gold is down $23.99 to C$1184.66. Silver contracts at the CBOT are down $0.54 to $12.80.

Bloomberg’s index for base metals is down 1.61 points to 113.60. Wheat futures at the CBOT are down $3.75 to $523.25.

All data taken at 2:54 p.m. EST

By Neils Christensen, neilsc@economicnews.ca

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