Gold’s Long-Term Potential Is Alive And Well
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Yesterday’s close: Settled at 1291.5, up 1.2
Fundamentals: Gold is lower this morning and seeing follow through pressures from Tuesday’s breakdown. The housing data yesterday was mixed but Industrial Production beat. Overall, the data has not been robust, but we have seen directional moves in the Dollar and Treasuries as if such has happened. In fact, the Citi Economic Surprise Index has continued lower, signaling that the data has continually missed the mark. However, data from Europe has been worse and the Italian political situation has also weighed on the Euro. What the data has shown though is higher prices; higher prices in the NY Empire State Manufacturing earlier in the week (a catalyst in pressure on Gold) and higher prices in ISM Manufacturing two weeks ago. This signals inflation but what the data has not shown is strong demand growth. This means that the long-term fundamental story for Gold is alive and well.
Technicals: Gold is still fishing for a bottom from the breakdown. In the last 24 hours, it has found itself in a wide range consolidation. We see strong support just below the market at 1277.5-1278.3 and view this as a buying opportunity for a retest back near the $1300 mark. The technical breakdown has forced selling from many longs and this opens the door for strong buying when the market stabilizes.
Resistance: 1296.2**, 1302.3-1306.6***
Support: 1277.5-1278.3***, 1247.2-1250****