Weaker Yuan Is Negative For Gold
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Last week’s close: Settled at 1223.2, up 3.1 on Friday and down 9.1 on the week
Fundamentals: Friday’s Yuan strength due to China adjusting their reserve requirement on FX forwards certainly boosted Gold and the metals complex. However, the editorial in China’s state-run newspaper pointing to not backing down in this trade conflict has again weakened the Yuan and thus Gold and the metals complex. The U.S Dollar is also stronger on a big whiff from German Factory Orders. Friday’s Nonfarm Payroll was otherwise supportive but has been quickly forgotten.
Technicals: Price action in Gold is lower again this morning with the fundamentals of the Yuan driving it south. The CoT report on Friday showed that Managed Money expanded their record short position in Gold and there is reason to believe that more have piled in through this morning. Gold struggled Friday and again today against first key resistance at 1227-1228.5. We maintain that Gold must get out above what is now second key resistance at 1235.6 in order to get out of this rut and begin to shake some of these shorts.
Resistance: 1227-1228.5**, 1235.6** 1244.6-1249.6**, 1259.2-1260.9**, 1278.2-1285***