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Gold Market Still Looks Crowded

Commentaries & Views

Yesterday’s close: Settled at 1336.5

Fundamentals: Gold has barely budged given the worst day in the history of the stock market. Most importantly, Gold is actually lower from the Sunday night open a week ago. Here, the S&P put in its all time high and began a correction of more than 10% in just about a week. The weaker Dollar relative to other currencies has been a key catalyst in Gold’s run, but the Dollar has gained ground since late last week. Further capping Gold’s gains is limited upside do to an overcrowded long position. The Dollar will remain key today with Trade Balance data due at 7:30 am CT and JOLTs Job Opening at 9:00. St. Louis Fed President James Bullard speaks at 7:50 am CT and if he comments dovishly in order to help the stock market gain solid footing, look for this to help boost Gold. To the downside, it is important to remember that Gold at times can be a casualty to stock market weakness in the midst of a crash due to selling to meet margin calls on the equities side.

Technicals: Gold traded to an overnight high of 1349.3 and again struggled against key resistance before turning back down. The 1349.7-1351.4 level remains a key hurdle that Gold must close out above in order to regain some bullish momentum. We maintain, regardless of the equity market, there is limited upside in Gold because of the crowded long position and the fact is, it needs a cleansing. First key support at 1329.1-1331.9 was tested and held twice now, for bulls looking to be in, we have also said this is the level in which we can make an argument to reposition, though we have not recommended such.

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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