The Strong Greenback Sends Gold Running

Gold added $2.00 in the Asian session as traders took advantage of yesterday’s tumble to buy up the cheap commodity, but there was no conviction in the markets as most traders expected precious metals to continue to ease. Gold is trading at 1267.00 this morning.  Precious metals should resume their downward trend on account of the upcoming reports to be released most notably the NF payroll report. The current projections are for another strong monthly gain of over 200K estimates are at 222K. If the report shows a higher than expected gain, this report could bringing down precious metal prices. But first traders will listened to the decision of the European Central Bank due on Thursday.

As the month closed demand for gold as an investment changed direction again and fell as gold hoards in the GLD ETF, which is the world’s largest gold ETF dropped. The current gold holdings are at 794.999 tons by the end of last week – nearly 0.64% below the previous week and down by 0.85% since the beginning of August. If gold hoards resume their downfall, this could signal the demand for gold as an investment is diminishing.

Silver and other precious metals continued to take cues from gold. Silver is down at 19.197 after declining over 200 points on Tuesday. Platinum is flat this morning at 1410.45. Silver was also down below 19.20 an ounce yesterday, hitting its lowest level since mid-June, while palladium fell back to 885 an ounce after having soared to impressive highs since the end of last week,

 

Industrial metals surprised traders this morning adding momentum against the strong US dollar. Copper gained 2 points to trade at 3.161 while palladium gained 10 points to reach 884.00. Copper ended lower Tuesday as a stronger dollar and concerns about demand from China outweighed support from upbeat US economic data. Palladium had hit its highest price in more than 13 years at the start of the week, rising well above $900 an ounce during trading on Monday, with hostilities in Ukraine and prospect of further sanctions against Russia helping to drive up the price.

Russia is responsible for around 40 per cent of world production of Palladium, with concerns of supply disruptions if the west chooses to punish Russian with more sanctions.

The Dollar Index climbed to its highest level in more than a year on Tuesday braking 83.00 for the first time since July 2013, sparking a move lower among some dollar-denominated commodities including copper. Many copper buyers use other currencies to fund their purchases of the metal, and as the dollar strengthens copper becomes more expensive for these market participants. The stronger dollar is a problem for all the commodities. US copper traders also continued to react to disappointing Chinese manufacturing data released over the weekend. Copper prices have also been under pressure amid ongoing tensions in Eastern Europe, as some traders worry that successive rounds of trade sanctions between Europe and Russia will weaken the region’s economy and slow demand for copper.