GOLD PRICES retreated after strong US retail sales data on Thursday, falling to 2-day lows at $1217 per ounce as the Dollar rose sharply with New York equities.
Dropping 1.8% from Tuesday and Wednesday's 7-week high against the Dollar, the gold price fell less steeply for Euro and Sterling investors.
Priced in Dollars, crude oil gave back a rally from new 5-year lows, while European stock markets meantime headed for their fourth daily loss in a row.
"The improving US economy [means] the strengthening Dollar will continue pushing gold prices down," says new analysis from French investment and bullion bank Natixis says.
Because a stronger Dollar, says Natixis, reduces "the need for gold as 'a safe haven in times of crisis'."
US stock markets gained 0.8% at the opening on Thursday – and the Dollar took back half this week's earlier 2% drop against the Euro – as the Census Bureau said retail sales expanded faster than analysts forecast last month.
US Treasury debt prices slipped, nudging 10-year yields up to 2.19% per year.
Major European government bonds rose, in contrast, knocking Germany 10-year Bund yields down to 0.67%.
Looking at the Dollar's earlier drop on the FX market, "
We do not understand what could be behind the weakness in the greenback," says the daily commodities note from US brokers INTL FC Stone.
"We would have thought that given all [this week's] market turmoil and equity weakness, the Dollar would have been bid higher."
But "the moves confirm a trend under way since last year," counters
an editorial at FT.com from James Mackintosh, "of the Dollar losing its [own] haven status."
Previously bid higher during times of crisis such as late 2008, "the Dollar has [now] become a growth currency," the FT says.
Because "investors have bought into the idea that the US economy is set for solid expansion...so signs they might be wrong [mean] both the Dollar and US shares fall together."
This week's "sharp drop" in the US Dollar," says a note from the Asian trading desk of refining and finance group MKS, "had earlier "prompted an aggressive rally for goldbreaking through the $1220 ceiling."
The top of gold's "daily cloud" says a note from Japanese trading house Mitsui – pointing to a technical analysis tool based on recent highs, lows and price averages – will come "at $1218 from Thursday of this week.
"Gold has not traded above the Daily Cloud for 4 months."
Wednesday night's "second consecutive attempt and failure to close above the 100-day moving average" says technical analysis from Canadian-based bullion bank Scotia Mocatta – now at $1235 – "hints to near term resistance around this level."
"So long as $1240 is not surpassed," reckons the technical team at Scotia's fellow London market maker Societe Generale – highlighting this May's low – "the downtrend remains intact."
