Trump's Fed Comments Is Great For Gold
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Yesterday’s close: Settled at 1194.6, up 10.4
Fundamentals: Gold started the week off on firm footing and extended gains to an overnight high of 1203.1, but technical resistance (discussed in the ‘Technical’ section below) has held the metal back from further gains. The Dollar has shed about 1.5% against both the Yuan and the Euro and today will find itself at an immediate-term inflection point. In Sunday’s Tradable Events this Week, we broke down what has been driving a safe-haven flight to the Dollar. Yesterday, we further emphasized this narrative on CNBC’s Trading Nation, discussing that the Dollar’s best days of this rally are behind it. Yesterday, President Trump criticized Fed Chair Powell for raising rates and called out China and Europe for weakening their currencies; his proactive stance on keeping the Dollar rally in check is great for Gold’s cause. Headlines will remain critical on this quiet day. Tomorrow, the U.S and China are expected to restart talks in Washington though President Trump added he does not think anything will come of it this week as he continues to play hardball. FOMC Minutes from the August 1st meeting are also tomorrow.
Technicals: Price action extended fell shy of key resistance at 1204; we have said Gold must close above here in order to neutralize last week’s move. However, we must ultimately see a move above major three-star resistance at 1210.7-1212.5 in order to only begin squeezing the shorts. A constructive session today would simply be achieving a close above 1198.9, but a continued failure to hold 1194.5 on a closing basis will leave Gold susceptible to near-term waves of selling back down to major three-star support.
Resistance: 1204**, 1210.7-1212.5***, 1227-1228.5**, 1235.6**, 1244.6-1251.6***
Support: 1179.7-1182***, 1167.1**, 1123.9***