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Gold futures drop below $1,400 as markets respond to rising price for the dollar

TradingPub Admin | May 15, 2013

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Want some futures trading education involving how gold contracts respond to changes in the value of the U.S. dollar relative to other currencies?

Gold futures scheduled for June delivery settled $28.20 per ounce lower at $1,396.20 an ounce on the Comex division of the New York Mercantile Exchange, according to Reuters. Spot gold also declined, falling as much as 2.5 percent to trade at $1,390.24, which was its lowest value since April 19.

This happened as the ICE Dollar Index was trading 0.4 percent higher at 83.904, and is up 2.7 percent in May from 81.715 at the start of the month, The Wall Street Journal.

The value of the greenback is crucial since many commodities contracts, including those involving futures, are denominated in the U.S. dollar. Therefore, if the currency rises in value, it makes it more expensive for purchasers using different currencies to buy these contracts.

"There is no reason to own gold as long as people keep on putting money into the stock market," Comex gold options floor trader Jonathan Jossen told Reuters. "You can see it everywhere that the economy is turning around."

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