Dollar strength reverses modest gains from traders bidding gold higher

NEW YORK (July 27)  Both spot gold and futures were trading fractionally lower on TUESDAY. However, this is deceiving as market participants have been actively moving gold higher. It is dollar strength that is moving gold prices negative as dollar strength has outweighed any modest gains from normal trading.

As of 3:40 PM EDT gold futures basis, the most active August contract is fractionally lower by 0.19% or $3.30 and fixed at $1715.80. At the same time, spot gold is also fractionally lower down 0.10% or $1.70 and fixed at $1717.76.

What is keeping gold from closing positive on the day is dollar strength. The dollar index is currently back over 107. After factoring in today’s gain of 0.67% the index is currently fixed at 107.065. An easy way to illustrate this is through the eyes of the KGX (Kitco Gold Index). The KGX screen capture above was taken at 3:38 PM EDT fixing an ounce of spot gold at $1718. Dollar strength was the strongest force as it moved gold an $11.20 lower. Market participants bid the precious yellow metal higher by $9.20 and tempered the effect of a strong dollar. This resulted in only a two-dollar decline in the net change in gold.

KITCO