Yesterday, US New Home Sales came in at 504k on an annualized basis, much higher than the expectation of 432k. It was the highest level of homes sales in the month of August in more than six years and on an annualized basis represented an 18% increase. This all spelled good news for the USD in the overnight session while the precious metals took a hit. The USD has now extended a four year high with improving economic data fueling speculation that the Federal Reserve is moving closer to raising interest rates.
Gold traded down to $1,205 overnight before speculative traders and physical buyers in Asia came in to lift it off its lows. Gold gained further legs in the NY session as equities sold off swiftly. A report that Russian lawmakers, in response to sanctions, may draft legislation that would allow them to seize foreign assets weighed on US equities. The Dow Jones is currently down 240 points (1.40%) and the inverse correlation it has had with gold of late allowed for the yellow metal to move up past $1,220. Silver hasn’t been able to move into positive territory like gold has today and support remains at $17.