Once Again USD Knocks-out Gold

USD Gold

According to Reuters, May 14, gold declined on Tuesday, breaking earlier gains, as the USD stabilized against the euro after mixed European economic data, as investor sentiment continued carefully and physical demand reduced in some markets.

Gold decreased 0.1% to reach $1,428.64 by 1037 GMT, having climbed by 1% to a session high of $1,444.96 an ounce in earlier trade. Gold has handled the pressure of a tougher USD over the past few sessions, hitting a two-week trough on Friday. It has dropped around 14% this year.

June U.S. gold futures delivery was decreased by 0.4% to reach $1,428 an ounce.

Saxo Bank senior manager Ole Hansen stated “The weaker dollar helped to give a bit of a boost to gold earlier on but at the first level of resistance at $1,445 the metal seemed to run out of steam and now we are testing the intraday support level at around $1,430,”. “Any sign of strength in the U.S. data is likely to create headwinds at the moment that will be one of things to look out for as this is having an impact on the dollar as well.”, he added.

USD up surged after early sufferers against the euro, which dropped after, weaker-than-forecast ZEW sentiment data from Germany. In the meantime, a remarkable increase in April’s U.S. retail sales on Monday reinforced the view that the world’s major economy stays strong, although damping speculation the Fed will spread out its bullion-friendly bond-buying program.

The monetary policy, as low interest rates inspires investors to put money into the non-interest-bearing asset, hazarding on price gains.

Gold improved about $120 since a sell-off in mid-April pulled prices to more than two-year lows at $1,321.35, but it is still well below last month of about $1,600, as investors moved to equities and cut exposure to gold bullion.

On Monday, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained stable at 33.811 million ounces.

The drop in gold prices last month encouraged a rush in physical buying in Asia and other countries, assisting gold prices lows, but physical demand for certain gold products started to decrease.

Silver dropped 0.4% to reach $23.50 an ounce, palladium also plunged 0.3% to reach $712.72 an ounce and platinum increased 1.2% to reach $1,493.24 an ounce.