Gold Rebounds Despite Stronger Dollar

The price of gold rebounds from its technical support level of $1,212 that it hit on Monday. (Actual low in the December contract was $1,211.) Kudos to my tech friends who virtually nailed the support level in gold.

Both the stronger dollar index and the across the board sell off in the precious metal ETFs seems to have no effect on the price of gold this morning.

Precious metal retailers are reporting steady buying by their clients. The significant sell off in the price of gold since the election has not stopped interest in the physical arena.

Financial advisors still reporting ETF redemptions for opportunities in the equity markets.

I find it extremely encouraging for our markets as we see a strong dollar and a strong sell off in the ETFS virtually having no negative impact in the gold price.

CME WATCH TOOL indicator for a possible rate hike in December now stands at 91 percent.

St. Louis President James Bullard said in a speech today, “A single policy rate increase, possibly in December, may be sufficient to move monetary policy to a neutral setting.” Will we see a repeat of last year’s one and done rate hike? That story, in my opinion has given gold the bid bias it enjoys this morning.

As I reported Monday, silver still seems most vulnerable. A decent rebound off the second technical support level at $ 16.58 (December low was $16.62) was met and rebounded, but lack of physical demand for metal in Europe will keep the pressure on the price.

If the dollar strengths further and we see more ETF redemptions, I expect gold to experience downside pressure. At this time, there doesn’t seem to be any real positive news to sustain this rally. As I said in my Monday comment, I think it needs to be repeated, according to my technical gurus, if the $1,212 level and the $1,206 levels in December gold are violated, watch out below.