Gold price movement
April gold futures contract trading on COMEX (the commodities exchange division of the New York Mercantile Exchange) closed at $1,196.2 per ounce on March 5. Lows were tested on March 3 and February 20. There were seven down days in the last ten trading sessions. The average down days in that period have been 0.12% lower than the highs on up days.
Gold prices close near day’s low
On the March 5 close, April gold futures contracts finished near the day’s low—down by 0.39%. Volume totaled 125,564 contracts. This was up by 18,001 contracts over the previous day.
Gold prices have dropped almost 39% from the highs reached in August 2011. A strong dollar, the growing US economy, and weak demand have all contributed to the decline.
Variables affecting gold
Over the last month, gold prices have reacted to the rising dollar. This trend appears to be continuing, with gold prices falling for the fourth consecutive trading session in March 2015. Market conditions are bearish for gold now that the US dollar has hit an 11-year high against the euro. The US dollar saw gains on concerns over how the the European Central Bank will implement its new bond buying program.
Expectations of better US jobless data are also likely to exert downward pressure on gold prices. On the plus side, gold buying activity in India could pick up with the upcoming festival season there, which would provide some support for gold prices.
The downward trend in gold prices will negatively affect gold stocks such as Yamana Gold (AUY), Kinross Gold (KGC), and Barrick Gold (ABX). Barrick Gold makes up 8.10% of the VanEck Vectors Gold Miners ETF (GDX). So clearly, GDX will also feel the pressure, as will another gold-focused ETF, the iShares Gold Trust (IAU).