Gold Suffering As U.S. Dollar Hits 2-Month High
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Last week’s close: Settled at 1338.3, down 10.5 on Friday and down 9.6 on the week
Fundamentals: Gold is taking it on the chin as the Dollar Index is trading to the highest level since in nearly two months and has nudged the highest level since January. Another burden for the metal has been rising Treasury yields; the 10-year is at the highest level since 2014 and right up against 3%. U.S economic data has not been robust, and the rise of each the Dollar and Treasury yields have come on the cooling of geopolitical tensions; another factor weighing on Gold. The Citi Economic Surprise Index is at the lowest level since the beginning of Q4 2017. The PMI trio of Manufacturing, Services and Markit Composite are due at 8:45 am CT. Existing Home Sales is due at 9:00 am CT.
Technicals: Price action has pushed down below the 1331.8-1333.7 level and this has encouraged further waves of selling. Gold is now testing into the lowest level since Nonfarm Payroll on April 6th, but the long-term chart remains far from damaged. It will be key to see how support at the 1322.4-1325.4 level is treated today and a close back above 1331.8-1333.7 will be significant in keeping the bears neutralized. While the tape is vulnerable in the near-term, we remain unequivocally long-term bullish Gold.
Resistance: 1340.5-1342.8**, 1348.8**, 1356.7-1358.4**, 1367.8-1370***
Support: 1322.4-1325.4**, 1312.4-1316.6***, 1304.6***