Gold prices are being pressured by an oil rally, which is lifting energy stocks. Nymex crude is up 5% this morning, while the dollar struggles to remain in the black. Gold's $18 gain yesterday on heavy volume broke prices up through a descending channel. The gold market will try to confirm that breakout today, before heading into the weekend.
Thursday's 1.5% gain means that gold should be closing the week on a positive note.
Spot gold is bouncing in a narrow range in the $1,230s this morning, still above the top of that descending channel. A little profit taking after yesterday's big gain is adding to the downward pressure from this morning's oil rally, but dips are being met with fresh buying.
June gold futures closed up $13.70 to settle at $1,237 yesterday. Spot gold recorded an $18.00 gain to close at $1,240.30.
We should see resistance today at the $1,238 mark, with $1,242 marking the next barrier. First support lurks at the $1,232 level, back-stopped by $1,224.
Follow the Bouncing Barrel
Crude prices ended a two-day win streak yesterday, falling over 1% on cloudy estimates on global economic growth. The drop in oil weighed on energy stocks, which helped pull stocks as a whole down over 1% This morning's rebound in crude is, of course, being followed by Wall St opening higher. It seems that the correlation between the oil market and the stock market keeps growing.
ALL The Fed Leaders
Stocks are also being helped this morning by last night's ground-breaking roundtable discussion between present Fed Chair Janet Yellen and every living former Fed Chairman. All four agreed that the US economy was doing well and getting better. None saw any "bubbles" in the market, though Volcker thought some aspects of the financial markets were "overextended." Of course, everyone thought that the other three were doing/did a great job during their time running the Fed.
Fed attention is turning towards the recent weakness in the US dollar, especially against the Japanese yen. Both the Fed and the Bank of Japan would like their currencies to trend lower, in order to help exports and reduce trade deficits. However, this contest is a zero-sum game, due to the prominence of both currencies in international trade.
The dollar is trading at a six-month low against the yen, pressuring the Bank of Japan to do something to reverse the trend. But as FXstreet notes, the Japanese central bank is constrained in what it can realistically do.
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