Morning Futures Roundup

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Trying to Find Direction
 Fundamentals

Gold futures have given back the gains made since the beginning of the year on a stronger US Dollar and tame inflationary data. Additional gains in the Dollar could further erode demand for the metal and cause traders to look to the treasury market instead. India, the world’s larger user of Gold, imported 18% less Gold in 2009 than it did in 2008, hinting that the physical market may remain cool.

The sharp rise in jobless claims in the US also hints that jewelry demand may remain lackluster at best, and could take a very long time to recover to levels seen several years ago. In addition to the impact of jewelry demand, the poor job data indicates that the recovery may not be proceeding at the rate that many had hoped, which could cool inflation fears and may cause stock prices to pull back.

A correction in stock prices may also bolster the Dollar because of the inverse relationship between the two over the past several years. If the Dollar is unable to hold-on to its recent gains, investment demand could revive. Commodity prices, in general, have given back some of their recent gains, especially in energies. The petroleum market may also have a large impact on precious metal prices over the near-term.




Technical Notes

Turning to the chart, April Gold futures are nearing support at the relative low close at 1086.00. We have seen two consecutive closes below the 20-day moving average, which suggests the market may have made a near-term high.


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April Gold also appears to be on the verge of testing the 100-day moving average. A close below this longer average could negatively impact the metal technically, and be a sign of intermediate-term weakness. Failure to push through support at 1086.00 suggests that prices could be range bound or could rebound to test resistance near 1150.00.


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