The USD Knockouts Gold

Gold Drops

In early trading Friday Gold futures prices at Comex were suffering and still at its losses, prices fell to a two-week low. The increase in the USD index late this week has encouraged a renewed selling interest in gold and silver markets. The near-term technical chart levels were broken on the downside Friday to provide the gold and silver market bears a new technical momentum. June Comex gold last traded down $41.00 at $1,427.00 an ounce. Spot gold was last estimated down $28.80 at $1,430.25.

The rush in the USD compared to the other main currencies, which began in the late trading Thursday and continuously to Friday, has attracted the world market. The USD index, hit a replacement two-week high overnight. There were rumors spreading at late Thursday that a main financial newspaper would shortly report the Federal Reserve is going to end the quantitative easing program. That made the USD edge higher and positioned gold prices to a strong downside. The past two days, the USD has rushed powerfully against the Japanese yen. On Thursday morning, the improved U.S. weekly jobless claims data was one of the factors that backed up the stronger U.S. currency. There is still no evidence that there have been any changes in the sentiment among Federal Reserve FOMC members putting aside the compromise of easy money policies.

Overnight, the drop in the yen assisted to drive the Japanese stock market to a five-year high. On Friday, Bank of Japan Governor Kuroda said that markets are determining foreign exchange rates. That is a sign the BOJ is not worried by the yen’s big decrease in the past several months.

Reports overnight said there was a positive entry of investor funds into gold-backed exchange traded funds (ETFs), at 2.5 tons, Thursday. The report also said that is the first positive daily entry in five weeks. U.S. economic data should be announced on Friday and it’s going to cover the treasury budget statement. Fed Chairman Ben Bernanke speaks Friday morning at a bank conference in Chicago. The London previous P.M. fixing of $1,465.50 and A.M. gold fixing is $1,449.25.

The bears still have technical advantages of gold in June, as of the bulls are having an upside technical momentum. On the daily chart gold prices is in a 7-month-old downtrend. The bulls coming upside near-term prices above solid technical resistance is at the May high $1,487.20. As for the bears downside prices under solid technical support is at $1,400.00.  First resistance was sighted at $1,440.00 and then at $1,450.00, while the first support was sighted at the overnight low of $1,425.00 and then at $1,420.00.