Dollar Strength Erases Today’s Fractional Gains in Gold Price

New York (Aug 29)  Although market participants continued to buy both physical gold and gold futures, today’s gains were not enough to overcome dollar strength. As of 4:30 PM EDT the dollar index is currently fixed at 98.165 after factoring in the gain of 0.258 points (+0.26%). At the same time gold futures basis the most active December Comex contract is currently fixed at $1548.70 which is a net decline of $3.10 on the day, or -0.21%. When we calculate the moves in gold futures and the dollar, we can see that there was actually a fractional gain in gold futures. However, today’s modest gains were unable to overcome the dollar index which is now back above 98.

The same dollar/gold relationship can be seen in physical holdings. According to the KGX (Kitco Gold Index) spot gold declined $3.70 today and is currently fixed at $1538.80. On closer inspection normal trading resulted in neither gains or losses. However just as we witnessed in gold futures dollar strength decreased the value of spot gold by $3.70.

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