Global Institute of Trading

Gold Continues Lower As USD & Stocks Rally

Gold had a double punch as stocks rise and demand for safe haven assets decrease and USD continues to rally.

Table of Contents

Bulls need some heavy lifting

Global stock markets were mixed overnight. U.S. stock indexes are solidly lower at midday, which is also supported for the safe-haven metals. Traders and investors are uneasy this week as China continues to lock down its major cities to prevent the spread of Covid. That’s leading many to think China’s economy, the second largest in the world, will suffer significantly this year, including more supply chain disruptions in Asia and around the globe. The Russia-Ukraine war has also heightened risk aversion in the marketplace the past several weeks. A top Russian government official today said the U.S. and Russia risk nuclear war. Inflation worries remain on the front burner of the global marketplace.

Bulls are trying to stop the bleeding after the recent downdraft that saw the market hit a nine-week low Monday. Short covering in the futures market and some perceived bargain hunting in the cash market were featured. Gold and silver bulls still have more work to do to break the near-term price downtrend lines that are now in place on the daily bar charts.

The key outside markets see Nymex crude oil futures prices higher today and trading around $101.50 a barrel. Higher oil prices on this day are also friendly for the metals markets. The U.S. dollar index is higher and hit another two-year high early today. That’s a negative for the metals. The yield on the 10-year U.S. Treasury note is presently fetching 2.75%.

source: kitco

Oil Easing

It was a busy day for energy traders after Germany signaled they were ready to support a gradual ban on Russian oil, the EIA crude oil inventory report posted a small crude build, and Dollar continues to weigh on commodity prices. Too much to digest, but the key takeaway is that oil prices will likely remain above the USD 100 level as long the dollar doesn’t have another massive rally.

The big news of the day is that Germany will support a gradual ban on Russian oil, but that won’t happen immediately so crude prices were unable to turn positive. 

Technical Overview

Price saw a break of $1,900 overnight causing a push to $1,885. Although we have a bearish stance on Gold right now we’ll need to see$1,860 level broken before any significant moves and possible push to $1,765 

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