Gold Recovers But Gains Limited By Strong Dollar

Dollar index rally is pressuring precious metals across the market. Gold is advancing, but gains are limited.
Mauricio Carrillo
Gold Recovers But Gains Limited By Strong Dollar
Gold Recovers But Gains Limited By Strong Dollar

Gold is recovering some ground in Thursday as investors are digesting mixed corporate earnings in the United States. Central banks’ decisions from Canada and Japan. Other precious metals such as Copper and Silver are negative.

Corporate earnings from companies such as 3M, Comcast, and UPS are publishing mixed reports on Thursday. Also, the market is now focused on jobless claims and durable goods orders in the US.

Earlier in the day, the Bank of Japan kept unchanged its monetary policy decision with its interest rates at -0.1%. Before, the Bank of Canada did the same with its rates at 1.75%. If something, both central banks are abandoning tightening plans, supporting dollar gains.

The champion dollar index

Gold gains are limited by the rally in the dollar index as the DXY has jumped to trade as high as 98.27, maximum since May 16, 2018. In the last three sessions, the Greenback won over 1.0% from the 97.00 area.

Currently, the dollar index is trading at 98.25, 0.20% positive on the day. Thought the unit is showing overbought conditions, technical studies and the chart are suggesting more gains in the short term.

Gold recovers some ground, but the 1,280 contains it

XAUUSD daily chart Gold April 25

Gold is trading positive on Thursday as investors are digesting mixed corporate earnings and geopolitical factors.

The metal is somehow extending its recovery from April 23 low of 1,266, but with the pair still trading below 1,280, the advance looks weak.

Currently, XAU/USD is trading at 1,277, 0.12% positive on the day. Immediate resistance is the 1,280 level, and above there, the 20-day moving average at 1,287, and 50-day MA at 1,300 are the frontiers.

To the downside, the 200-day moving average level at 1,250-45 is the level to watch. As Benjamin Lu, analyst, Phillip Futures, said in a note, “heavy technical selling activities have imposed negative pressures on the precious metal for the near term.”

Lu says that bears should break below 1,265 for a continuation of the bearish scenario. “A bearish breakthrough will see gold prices target the next main station of $1,245 in the coming term.”

Silver loses early recoveries, and posts drop on Thursday

XAGUSD daily chart Silver April 25

Silver is trading negative on Thursday as investors are betting on the Dollar index and the upside move in gold is not that strong to push its correlated XAG/USD up. The unit remains pressured below the 200-day moving average.

The unit is trying to extend recoveries from its 2019 lows at 14.75, reached on April 23. However, silver remains contained by the mentioned 200-day moving average at 14.97 and the 14.90-15.00 area is acting as a strong resistance.

Currently, silver is trading at 14.87, 0.40% negative in the day. Technical studies are weak and are suggesting that any recovery will be short-lived.

FX Empire analyst Christopher Lewis is expecting more choppy movements in silver as he believes the 15.00 is a strong level that will not give up easily.

“Beyond that, if we were to break above the downtrend line of the wedge, then we could start to think about the market rallied a bit,” Lewis said in an FX Empire article. “Overall though, I think at this point it’s likely that we are going to see more back and forth as the US dollar is at extreme highs.

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