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Gold Will Be Vulnerable To Selling Waves

Commentaries & Views

Yesterday’s close: Settled at 1318.6

Fundamentals: Yesterday was not the combination that Gold bulls want to see; a stronger Dollar and higher rates because of more hawkish monetary policy. As we have discussed, higher yields because of ramped up fiscal policy that induces inflation is bullish Gold. Though a more hawkish monetary policy serves as a near-term headwind, we believe Gold will remain constructive as it digests these possibilities. Lost in translation yesterday was a very poor read on Durable Goods and this will weigh on first quarter GDP. Fed Chair Powell surprised markets with a strong tone that was more hawkish and assertive than anticipated but not overall surprising. He resumes his congressional testimony tomorrow.

Technicals: Yesterday, we discussed how Gold failed to get out above first key resistance and a move below first key support will send prices lower and open the door for a longer consolidation phase. This is where we find things now. We remain very upbeat on the long-term prospects for Gold. In the near term, we want to see support at 1319-1322.1 continue to hold on a closing basis. Though the market is vulnerable to waves of selling down to our rare major four-star support at 1302.2-1309, this should present a buying opportunity.

Bias: Bullish/Neutral

Resistance: 1328-1331.7**, 1343.2-1344.9**, 1350.2-1351.3**, 1367.8-1370***

Support: 1319-1322.1**, 1302.3-1309****, 1293.2***

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