Gold Looking For Direction From ECB And Euro
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Yesterday’s close: Settled at 1231.8, up 6.3
Fundamentals: Gold has again retreated from key technical resistance (discussed below) but a major factor is the stalled rally in the Chinese Yuan. After yesterday’s strength, the currency is back within an earshot of the recent lows and the lowest level since July 2017. The ECB left policy unchanged and President Mario Draghi is getting underway with his speech this morning. The Euro will continue to play second fiddle to the Yuan but nonetheless it remains crucial. Yesterday’s truce on trade between President Trump and the EU rallied the Euro and supported Gold into the overnight. Durable Goods, Goods Trade Balance and weekly Jobless Claims all came in light this morning and this should act as a supportive factor for the metal but the ECB this morning is a bigger focus than the data.
Technicals: Gold has remained constructive to the downside, holding our pivot level at 1225.8-1227.9 and this is absolutely crucial in keeping the bears from regaining the most immediate-term edge. Right now, the bears have positioned and unless price action closes below there, the risk is to the upside. The problem though is, the buyers are not showing strong belief yet and first key resistance at 1236.2-1238.3 which aligns with previous lows has proven to be a tremendous hurdle. We must see a close above here to get Gold out of the gutter while a close above 1249.8 will begin squeezing those positioned shorts.
Resistance: 1236.2-1238.3**, 1249.8**, 1261.9-1266.9***
Support: 1220**, 1215.3-1216.1*, 1210.7**, 1204***