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Gold, Other Commodity Markets Rattled By Strong US Dollar, Upbeat US Data


Live 24 hours gold chart [Kitco Inc.]

(Kitco News) – The U.S. dollar index is on a tear today, and is taking down gold, silver and other raw commodity markets in its wake. Gold has dropped below major psychological support at $1,300.00 and has so far scored a daily low of $1,291.50, basis June Comex futures.

The USDX scored a five-month high following upbeat U.S. economic data released earlier today that included retail sales and the Empire State manufacturing survey. This data corroborates notions the U.S. Federal Reserve will continue to raise interest rates–and maybe just a little more aggressively than many had reckoned.

Adding to the upside push for the greenback today was a downbeat gross domestic product report coming out of the Euro zone today, that helped to sink the Euro currency against the dollar.

U.S. Treasury note and bond yields rose to multi-year highs today, with the benchmark 10-year note pushing above the psychologically important 3.0% level. Rising bond yields could pull away investor demand for gold, which carries no dividend, and given the higher yearly payback the bond market is currently offering. However, it can also be argued the higher bond yields suggest higher price inflation, which could support gold (and other hard
assets) should it become problematic down the road.

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