Gold Just Needs One Small Catalyst To Surge Higher
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Last week’s settlement: Settled at 1323.4
Fundamentals: The Gold trade never died, it just momentarily lost some interest as new Fed Chair Powell stole the spotlight. However, the White House announced it plans to impose tariffs on steel and aluminum; the global trade uncertainty that this brings quickly reinvigorated the Gold market. On Thursday morning upon comments from Powell, NY Fed President Dudley and a better ISM Manufacturing read, Gold traded to a low of 1303.6 which was -2% on the week and -3% from its high on the week. However, the metal settled the week down only $5. With a big week of data and Fed commentary ahead, the Dollar will remain critical to this trade and must be watched very closely. Today, ISM Non-Manufacturing is due at 9:00 am CT. Ahead of this key read is Markit Composite and Services PMI at 8:45 am CT. The only guarantee this week is Dollar volatility with the ECB and BoJ set to meet on Thursday and Nonfarm Payroll due Friday.
Technicals: Last week’s price action opened the door to a tremendous opportunity for bulls to reposition. For much of January, the CFTC’s Commitment of Traders showed a net-long position around 10:1. Though longs began reducing their holdings in February, shorts did so at a faster pace and the net-long position was at 13:1 as of reporting February 20th. As of reporting for the week ending this last Tuesday the net-long position reached 6.5:1, the lowest level since the week ending December 27th; Gold rallied $70 or 5.5% from that point to its high. Our assumption here is that Thursday’s sharp sell-off to major three-star support forced further liquidation from the long camp and many of those longs have yet to reposition. In conclusion, we remain outright Bullish in Bias and believe that Gold is one small catalyst away from a strong surge higher.
Resistance: 1326.8**, 1334**, 1341.2-1342.9**, 1350.2-1351.3**, 1367.8-1370***
Support: 1305.5-1306.6***, 1291.5-1295.7****