Gold Futures Fall on Stronger Dollar and Profit-Taking

Strategic Insights -

Gold futures declined on Monday, weighed down by a strengthening US dollar, lower equities, and oil prices, as well as profit-taking among investors. The price of April gold fell $21.20 to settle at $907.20 an ounce on the Comex division of the New York Mercantile Exchange. Analysts attributed the decline to a combination of factors, including the dollar's strength and crude oil's weakness, which made gold less attractive to investors.

Key Takeaways:

  • The price of April gold fell $21.20 to settle at $907.20 an ounce on the Comex division of the New York Mercantile Exchange.
  • The US dollar's strength was a major factor in the decline of gold futures, with the ICE Futures US dollar index initially higher and later slightly down.
  • Profit-taking was also a contributing factor, with investors booking profits after gold had become overbought.
  • Long liquidation and the metal's technical picture also contributed to the decline, with analysts predicting a steep correction if prices trade lower tomorrow.
  • A close below $900 could send gold to $870 before a significant correction, according to Sterling Smith, vice president with FuturesOne.
  • Lower gold prices led to pressure on silver futures, with Comex March silver falling 15 cents to settle at $12.415 an ounce.
  • Support for silver is seen at $12.18, but analysts predict a steep and accelerating correction below $12.
  • The next stop to the downside for silver could be $11.25, according to Smith.

Statistics:

  • April gold fell $21.20 to settle at $907.20 an ounce.
  • Nymex March crude was down 66 cents at $41.02 a barrel.
  • Comex March silver fell 15 cents to settle at $12.415 an ounce.
  • Support for silver is seen at $12.18.
  • The next stop to the downside for silver could be $11.25.
  • Palladium rose $5.15 to settle at $198.45 an ounce on the Nymex exchange.

Sources:

  • Dow Jones Commodities News via Comtex
  • Zachary Oxman, senior trader with Wisdom Financial
  • Pat Donnelly, senior broker with Peak Trading Group
  • Sterling Smith, vice president with FuturesOne
  • Matt Whittaker, Dow Jones Newswires; 201-938-5959; matt.whittaker@dowjones.com
  • Dow Jones Newswires 02-02-09 1450ET
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