Till when metals will continue to bear the hammering from the dollar!
The dollar continues to trade positively today extending yesterday's winning streak, although we witnessed noticeable gains across American and European equities yesterday. Asian stocks trailed the race today affected by positive economic data from the region today.
Data from the second largest economy showed rising demand on vehicles and exports advanced by an annualized 45% in the past month, and Taiwan followed with good industrial figures signaling continued recovery in the global economy. Yesterday the DJIA settled at 10888.83, while today the Japanese Nikkei 225 index closed at 10815.03.
As for commodity indices, they also ended with a mixed signal yesterday where the S&P GSCI added 0.09 while RJ/CRB index fell 0.57 points and that was affected by the volatile performance from energies and metals.
Metals continued today yesterday's trend, as they declined with the start of the session and ended in New York with some positivity. Yesterday gold replenished its losses to end higher by 0.02% at 1102.80, where it met good demand around 1094.40 which was the lowest set yesterday.
As for silver, it added more gains and the positivity was sensed with the flow of speculative investments, as it settled at 16.99 higher by 0.18% after setting the low of 16.72. Platinum added 0.56% yesterday to close at 1608.00.
We can see the effect of the good U.S data on metals that tilt towards their industrial nature, where first comes platinum and then silver of the aforesaid and the gains were respectively represented upon them opposed to gold being less of a source of metal.
As of 03:39 EST today, gold was trading around 1100.00 down by 0.24%, while silver was off by 0.71% at 16.87 and platinum managed to lose most of the recorded gains the previous session down by 0.50% around 1600.00.
The strong dollar appreciation is pushing metals to the downside and forcing a profit taking wave on metals and triggering new speculative short positions across futures markets.
The fear was associated with heading to the dollar as the haven, yet the rapid gains for greenback alongside the weakness of the euro and sterling themselves has managed to shine the dollar further; especially as the fundamentals from the federal lands are confirming the better positioning of the nation compared to its European counterparts, supporting the dollar over the metals further with easing outlook fears for the U.S economy.
Yet we should take into consideration the fact that the general trend for precious metals and especially gold is still bullish, and the declined in metals will support physical and retail demand on the metal which will keep the bias to the upside.
Therefore, we do believe that the downside move is highly likely yet we do not rule out the resumption of the upside move at any second. As we mentioned the intraday move remains to the downside especially if metals managed to stabilize below critical psychological levels at 1100.00 for gold, 1600.00 for platinum and 16.80 for silver; those levels are likely to define the intraday and maybe short term trends.