Diamond News

Gold slumped further overnight in a range of $1316 - $1307 (6-week low), where it found support at the 5-bottom level of $1307-10 (3/16, 3/19, 3/20, 3/21 and 4/30 lows).

Continued strength in the US dollar provided downward pressure for the yellow metal, as it rose from 91.80 – 92.32 (4-month high, breaks 200-day MA at 91.94, turns positive for the year).

The dollar was boosted by weakness in the pound ($1.3770 - $1.3656, 4-month low, miss on UK Manufacturing PMI) and in anticipation of a hawkish FOMC meeting statement tomorrow, and was exacerbated by the illiquidity from today’s May Day Holiday.

Global equities were mixed with the NIKKEI off 0.2%, FTSE +0.5%, S&P futures unchanged, with the other major markets on holiday. Oil - which rallied sharply off of Netanyahu’s comments yesterday regarding Iran - pulled back to $67.73, while the US 10-year bond yield remained steady between 2.951% - 2.963%.

After the NY open, a dip in S&P futures (2638) along with a tick down in 10-year yield (2.949%), helped tug the DX down to 92.18.

Gold rebounded in response, and clawed back to $1310. However, currency players used the dip to get long, and brought the greenback up to 92.35. Gold fell in response, and slid back to support at $1307.

At 10AM, despite weaker reports on US Construction Spending (-1.7% vs. exp. 0.5%) and ISM Manufacturing (57.3 vs. exp. 58.5), the dollar continued to rise.

The greenback was helped by some positive comments from Commerce Secretary Ross regarding extending the steel and aluminum tariff exemptions and his upcoming trip to negotiate trade issues with China, along with a tick up in the 10-year yield to 2.979%.

The DX charged ahead to reach 92.57, and gold sold...

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