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Strong dollar drives gold prices lower: Will it break the channel?

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Gold futures’ price action 

April gold futures contracts trading on COMEX settled at $1,160.10 per ounce on Tuesday. COMEX is a commodity division of NYMEX (New York Mercantile Exchange). Prices tested the lows on November 12, 13, and 14, 2014. March 10, 2015, was the sixth down day in the last ten days. The average down days have been 0.39% more than the up days over the last ten trading sessions.

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Gold hits 2015 lows

Gold prices for the April delivery settled at the day’s low—down by 0.55%. It hit the yearly low on March 10, 2015. The volume for the day totaled 170,223 contracts. It accelerated by 46,610 contracts from the last trading day.

Gold is in a long-term downward trend. It fell more than 40% from the highs in August 2011. A strong dollar and robust US economy led to a fall in gold prices. Gold’s trend has been downward in February and March 2015. It was driven by the same factors. On March 10, 2015, gold continued to trade lower due to a rising dollar. The dollar hit a 12-year high against the euro on the consensus of a rate hike by the Federal Reserve in the later half of 2015.

Key gold ETFs are affected due to lower gold prices. The ETFs include the VanEck Vectors Gold Miners ETF (GDX) and the iShares Gold Trust (IAU). It also impacts gold companies like Gold Fields Limited (GFI), Harmony Gold Mining Co. (HMY), and Royal Gold (RGLD). Royal Gold accounts for 4.2% of GDX.

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