Gold And Dollar Prices Established Direction Correlation Amid Speculative Buy In Both Segments

  • Apr 26, 2019 AEST
  • Team Kalkine
Gold And Dollar Prices Established Direction Correlation Amid Speculative Buy In Both Segments

Gold prices recovered in the international market, with Gold Spot climbing from its recent low of $1266.43 (Day’s low on 23rd April) to the present level of around $1282. The market participants believe that the sudden spike in gold prices despite the gain in dollar prices is mainly due to a speculative buy in the international market prior to the pending figures of the United States Advance GDP figures for the March 2019 quarter.

The United States Advance GDP figures are expected to remain 2.2% by the market participants, unchanged as compared to the previous quarter.

However, as per certain speculators in the currency market, the market forecast of 2.2% represents an estimation prior to the development between the United States and China over the past bilateral disagreement. They believe that the market consensus of 2.2% underestimates the accurate estimation; and are thus betting on the high GDP figures due to which dollar prices spiked in the global market.

Dollar Index rose significantly from the level of 97.26 (Day’s low on 22nd April 2019) to the level of 97.99 (Day’s high on 25th April). However, the recent unemployment figures prompted bullion investors to believe that the improvement in the economic conditions of the United States is in question now. As per the data, the U.S. Weekly unemployment claims stood at 230k for the week ended 19th April 2019, against the market expectation of 199k.

The Unemployment in the United States plunged drastically in the past, but the recent high unemployment claims made a perception in the bullion investors that the market consensus of 2.2% GDP for March 2019 quarter in the United States overestimate actual estimation.

Thus, the speculative view of currency and bullion speculators led the gold and dollar spiked simultaneously in the global market. Whereas, both the assets hold inverse correlation. The direction and trend in gold prices will become more evident once the actual estimation from the Bureau of Economic Analysis presents itself in the market. The figures are due for 26th April 2019.

Most of the Gold miners on the Australian Stock Exchange traded positive over the rise in gold prices. Some miners also gained significantly, and the gains in the share prices of ASX listed gold miners ranged from 3% to 5% at the end of the day’s session.

Kirkland Lake Gold Limited (ASX: KLA) started the day’s session at A$44.000, which remained the day’s low. The share prices of the company surged to register a high of A$47.900, before settling at A$46.740, up by 5.152% as compared to its previous close.

Another gold miner on the Australian Stock Exchange, Saracen Mineral Holdings Limited (ASX: SAR) gained significantly during the day’s session. The share prices of the company rose to the level of A$2.720 after opening at A$2.560 (the same level marked the day’s low as well). The share prices ended the day’s session at A$2.700, up by 5.469% as compared to its previous close.

Various other miners such as Perseus Mining Limited (ASX: PRU), Newcrest Mining Limited (ASX: NCM), Millennium Mining Limited (ASX: MOY) followed the same trajectory.


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