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Gold Continues To Hold Value But Be Patient

Commentaries & Views

Yesterday’s close: Settled at 1343.3 ahead of the Fed decision

Fundamentals: Gold continues to hold value very well and the Dollar is playing a large role in this. The Fed didn’t surprise to the hawkish side because much of what they said was arguably expected. They have set themselves on a trajectory to hike four times this year if inflation continues to tick up. They expect inflation to stabilize later this year near their target of 2%. The good news for Gold is that we don’t expect this alone to increase the value of the Dollar relative to its peers as inflation should be doing the same in Europe. However, we continue to believe that the Dollar is due for a near term bounce and therefore we are being patient with Gold at these levels. For now, Treasury yields are grinding higher and this is also holding back Gold. Nonfarm Payroll is tomorrow.

Technicals: Price action has retreated from its post-Fed bounce that reached a high of 1351 and failed against our first key resistance. We maintain that we are long-term bullish Gold but are waiting for a more attractive reentry point. We cannot make a strong argument to do so until at least 1329.1-1331.9 is tested and the Dollar relieves some of its oversold technicals.

Bias: Neutral

Resistance: 1349.7-1351.4**, 1365-1370***, 1377.8**, 1392.6***, 1432.9**

Support: 1329.1-1331.9**, 1321.7***, 1307.6-1312***

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