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Wait For Gold To Reclaim Its 200-DMA

Commentaries & Views

Yesterday’s close: Settled at 1319.2, down 4.2

Fundamentals: Gold bounced yesterday morning as traders defended the 200-day moving average. Buyers continued to step in after misses on Personal Income and Consumption was followed by a bad read on Pending Home Sales. Price action actually traded more than $10 from the low to a high of 1321.9 and some could argue that Israel Prime Minister Netanyahu’s presentation on Iran’s lies added further support from geopolitical tensions. All of this is out the window today as the Dollar Index extended gains out above its 200-day moving average to the highest front-month level since January 11th. Today’s volume could be on the lighter side as many nations are on Labour Day holiday. We look to Manufacturing PMI data at 8:45 am CT and the more closely watched ISM Manufacturing read at 9:00 am. The Fed begins their two-day policy meeting today and the conclusion of these meetings on Wednesday has been very friendly to Gold recently. Additionally, selling of the metal ahead of these meetings is nothing new either.

Technicals: We remain unequivocally long-term bullish Gold. However, the decisive move below the 200-day moving average today does worry us. It will be important for the metal to recoup this level on a closing basis. Being patient and buying the dips, not adding too much too quick, has given the opportunity to sell bounces profitably. Support does come in at 1303.6-1306.6 as this area was previous swing lows.

Bias: Bullish/Neutral

Resistance: 1322.4-1326**, 1332***, 1337.4*, 1342.5**, 1348.8**, 1356.7-1359**, 1367.8-1370***

Pivot: 1313.4-1316.6***

Support: 1303.6-1306.6**, 1300***

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