Strong U.S. Dollar A Major Headwind For Gold
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Yesterday’s close: Settled at 1308.3, up 7.0
Fundamentals: Gold has traded tremendously well given the outsized bullish move in the U.S Dollar. The catalyst for such a move in the Dollar is Euro weakness as they are not expected to hike rates until the second half of 2019. Furthermore, the Dollar traded lower initially after the Fed hiked rates and have seemingly top ticked their rate hike path. While the Dollar remains the clear winner this week, one could view this battle as the best of the weakest and for that reason the groundwork has been laid for Gold in the longer-term. In the near-term, U.S and China trade tensions have also kept a bid under the metal and we look to an official announcement from the White House on $50 billion worth of tariffs today. NY Empire State Manufacturing is due at 7:30 am CT, Industrial Production at 8:15 am CT and the first look at June Michigan Consumer Sentiment will be key at 9:00 am CT.
Technicals: Yesterday we stepped up our Bullish Bias to become outright such. Today, after at least the eighth failed attempt to get out above and close out above major three-star resistance we have no choice but to begin to slightly Neutralize this. In fact, if you spoke to our trade desk yesterday, this was something that we updated midday. Disappointing yes but now it is time for Gold to continue to be as constructive as it has been at the $1300 mark and with lingering fundamental obstacles we are still intermediate and long-term upbeat. However, in the near-term Dollar strength worries us, a close above 95 in the September Dollar Index will likely put significant pressure on Gold and open the door the mid 1280’s; take note.
Resistance: 1308.7-1309.6***, 1315**, 1321**, 1332.4***
Support: 1297.9-1299.9**, 1293.1*, 1286.8**, 1277.5-1278.3***, 1247.2-1250****