Economic Circumstances Cutting Hedge Demand Stalls Gold Futures

Gold futures has stalled and is failing to follow-through to the upside as a stronger US dollar and muted inflation data is said to be cutting demand for the precious metal as a hedging tool. Gold futures are down $6.50 per ounce at $1,245.20, but have been $10 lower so far this trading session.

The government reported today the cost of living here in the US barely edged higher last month, while the greenback is realizing its second day of gains against other major currencies. Plus, holdings of bullion-backed global exchange traded products are reportedly near a five-year low with money-managers reducing their bullish holdings in eight of the past nine weeks.

Gold purchases have subsided over the near term due to a strong US dollar and expected low inflation for the foreseeable future,” said Kevin Riordan, director of research at Capital Trading Group in Chicago, sharing his insight regarding the current gold futures situation.

Gold futures technical trend has recently turned “up,” however with little follow-through. We are short gold futures since last week but am having a difficult time maintaining a long position in “mini-gold” futures.

ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.