“Gold really got spooked by the dollar strength today,” Frank Lesh, a broker and futures analyst with FuturePath Trading LLC, said in a Wall Street Journal article. “If we get down there, I’d be very surprised if we didn’t” reach new multiyear lows.
Additionally, many traders have been dumping the opposite end of the dollar trade after the improving U.S. economic data raised speculation that the Federal Reserve would hike interest rates some time in June. If the Fed tightened its monetary policy, the U.S. dollar would further appreciate against foreign currencies and weigh on gold prices.
Source: Kimble Charting Solutions
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Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of GLD.