Friday, March 2, 2018

After falling to its lowest level for 2018, gold rebounds nearly $20 as the dollar loses its gains from the Fed's two days of testimonies

This week was extremely detrimental for gold, as the price fell from a high of $1340 at the beginning of the week down to its lowest level for 2018.  And the catalyst for this decline was primarily the two days of testimony that Fed Chairman Jerome Powell provided to the House and Senate.

But the fall in the gold price, and the over 200 bps rise in the dollar this week, appears to be short lived as the jawboning from another source (President Trump) seems to have reversed the trend for both assets.

Gold chart:

Dollar chart:

The invisible hand of the markets showed once again why we call them “they.” We have all heard the expression -- they pushed the markets, they are buying -- and Thursday at about 12:25 p.m. EST when gold hit $1,303, they decided that was low enough and gold took off from our level of support and rallied $20 from the bottom. 
It was like magic. There was no announcement. They just decided to buy and buy like crazy. The rally was short quick and powerful, causing a short squeeze, also attracting some new money. This is a common event, especially when they get too big on one side of the market or the other and the market goes ballistic -- in Thursday’s case up. - Kitco


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