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Dollar Momentum Topping Out

Commentaries & Views

Yesterday’s close: Settled at 1313.7, down 0.4

Fundamentals: Gold stabilized well late in yesterday’s session after President Trump announced his decision to leave the Iran Nuclear Deal. We pointed to this event as potentially bringing geopolitical premium back into the metal and that is exactly what happened. However, equity markets quickly stabilized and the U.S Dollar Index marched to a new swing high overnight; Gold traded about 1% from its high yesterday to a low of 1304.2 early this morning. We are now looking at a reversal in Gold from that low as very constructive and the metal is seeing further support after a miss on U.S PPI data. We remain extremely upbeat on Gold in the long-term. There is a 10-year Note auction at noon CT today and Atlanta Fed President Bostic speaks at 12:15 pm CT. Tomorrow’s CPI read is crucial.

Technicals: We are now monitoring the potential of a bearish engulfing pattern in the Dollar Index upon a move below 92.505 today. This would be extremely supportive to Gold which has built a base above the psychological $1300 mark. Yesterday, it failed to settle above the 200-day moving average at 1314.7 but price action continues to hug this level in a constructive manner. Resistance does come in at 1323.9 but if Gold can get momentum north, the absence of a heavy net-long position will spark fresh buying.

Bias: Bullish/Neutral

Resistance: 1323.9**, 1327.2-1327.9***, 1335.9**, 1343.8**, 1356.7-1359**, 1367.8-1370***

Pivot: 1314.9-1315.7***

Support: 1303.6-1306.6**, 1300***, 1296.2***

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