The world's reserve currency marked a fourth-straight day of gains on Friday in advance of the U.S. releasing economic data forecast to show a strengthening housing market. Though gold futures and the U.S. dollar typically perform the inverse of one-another, thus far this year the yellowish metal has gained about 7.3 percent, which is linked with concerns about economic growth in the U.S. and ongoing strife between Russia and Ukraine, among other worldwide hotspots.
The stronger year thus far for bullion comes after it failed, for the first time since 2000, to mark annual gains.
"The dollar has a huge influence," head of currency and metal trading Bernard Sin with MKS SA in Geneva, Switzerland, told the news outlet on Friday. "Ukraine, Thailand, China, Vietnam. These are all considering factors."
New home sales data likely to prompt movement
The U.S. Department of Commerce is preparing to release economic data about new home sales, for which projections are strong. While new home sales last month dropped 14.5 percent, analysts are more optimistic about the data for this month.
The Commerce department is slated to release the data in the morning.
Bullion emerges as constant safe haven
Demand for the yellowish metal typically surges during trying times – either economic such as while the sovereign debt crisis was tearing through euro zone banks, public finance systems and markets, or during civil strife and violent uprising. Because the yellowish metal serves as safe-haven storage, it becomes attractive to investors looking for a place to safeguard their savings.
Markets in the U.S. and the U.K. are likely to have a slow trading day ahead as both are facing three-day weekends, The Wall Street Journal reports.
"With a long weekend in the U.S. and U.K., expect a quiet one today," head of precious metals David Govett with Marex Spectron told The Wall Street Journal. "There is an election in Ukraine over the weekend and ahead of this, I suspect the market will not want to be overly short, should something calamitous happen there."
The ongoing conflict in Ukraine between security services and pro-Russian separatists has drawn investors to bullion for stable, safe-haven purposes. In February, Ukraine nationals forced out the prime minister and Russian troops filed into Ukraine. Following a referendum, Russia annexed part of Crimea while Ukraine security services worked to staunch additional separatist movements that Russia seems to be encouraging.
Consequently, the demand for gold futures has progressively climbed.
Ukraine also is facing an election, for which gold prices might be spurred one way or the other, one analyst told The Wall Street Journal.
"In the least, this event will provide some closure to the initial phase of the crisis and either return the situation to a slow boil, or alternatively, make it more heated," analyst Edward Meir with INTL FCStone told The Wall Street Journal. "Either scenario should knock gold off its tight trading range and give prices more concrete direction."
Reuters reports gold futures climbed on Thursday, in the aftermath of the release of minutes of the policy-making arm of the U.S. Federal Reserve on Wednesday.
Thought the consensus of the Federal Open Market Committee during the April 29 and 30 meeting was the U.S. economy is growing stronger and stimulus measures are likely to continue being tapered as the year continues, interest rates are another story.
One trader told Reuters that borrowing costs are likely remain stagnant.
"Gold's up from the back of the Fed news yesterday. Realistically, it doesn't look like the Fed will raises interest rate any time soon," precious metals trader Thomas Capalbo with brokerage Newedge told the wire service on Thursday.
THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.
THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.
TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.
YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.
GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.