It was a cold and quiet late Friday afternoon New York time. Then gold dropped down through the 1300 support level. This came as a big surprise to many gold bugs who thought that since gold was recently testing 1350 that it wouldn’t go below 1320 any time soon. Well, as the market likes to say, surprise surprise.
Gold’s drop was in response to a big up day for the US Dollar
. Positive news about the US economy
Thursday and Friday morning doubtless helped the US Dollar have its best day in over a month. Among other indicators, the latest Chicago PMI surprised to the upside
, with a 64.7, the largest monthly increase since Feb 2017.
And housing numbers were up too, with overall ownership up to 64.8% which is the highest number since early 2014. Maybe Millenials are finally moving out of mom & dad’s basement
? (haha, that was supposed to be a joke)
Gold miner stocks took a big hit on US markets too, as traders dumped recent purchases to avoid being caught in a landslide. Of course, dumping stocks is what creates landslides in the market, so it became a bit of a self-fulfilling prophecy on Friday afternoon.
All this good news was reinforced over the weekend as China and the US suddenly seem a lot closer to an end
to the trade war. Gold
will need to hold 1285 this week or face another leg down. Keep an eye on the US Dollar index, as gold’s price is moving almost in lock-step with the buck these days.
The Gold Enthusiast
DISCLAIMER: The author holds no positions in any mentioned securities. He is long the gold mining sector with small, non-market-moving positions in NUGT, JNUG, a few junior mining stocks, and some covered calls in NUGT, and may trade any of these in the next 48 hours.