An improving U.S. economy is not a good thing for gold prices, as it usually generates more confidence in the stock market. As a result, there is less demand for the safe haven gold offers as an investment, which drives down prices.
Investors who trade gold should be paying close attention to U.S. economic indicators, such as the housing market. This indicator showed signs of strength in better than expected home sales in March and price increases. Coupled with the fact that stocks posted gains, gold prices recently dropped to the lowest level in more than two months.
Upcoming economic releases that could impact gold prices include durable goods orders and jobless claims. According to Reuters, traders said these reports will set the tone for gold moving forward.
“If those numbers come out better than expected or show continued improvement in the U.S. economy, you should start looking at the $1,250 area as the next support level for gold,” Thomas Capalbo, precious metals trader at brokerage Newedge, told the news source.
One factor that could prevent gold from falling too much is new home sales, which fell to an eight-month low, according to the U.S. Department of Housing and Urban Development. The 14.5 percent decrease from March was much lower than the 2.3 percent improvement predicted, according to Bloomberg.
If durable goods and jobless claims come in lower than expected as well, investors may not have to flee gold out of fear of significant declines.
The post Gold Prices Decline on Strengthening US Economy appeared first on | HY Markets Official blog.
Article provided by HY Markets Forex Blog
