Yesterday’s close: Settled at 1194, down 4.3

Fundamentals: Gold is extremely constructive this morning. Despite a weak close yesterday price action has recovered in a very firm manner this morning. After trade talks between the U.S and China yielded nothing of substance, traders attempted to front-run the weakening of the Yuan. NOT SO FAST! The Yuan has strengthened this morning after their central bank announced the use of “counter-cyclical factors in the Yuan midpoint-fixing mechanism”. This is something that they brought to the forefront last May and the Yuan strengthened then. Commodities across the board have responded and this will be a crucial trend change if it holds.

The week’s main event is Fed Chair Powell’s keynote speech at Jackson Hole at 9:00 am CT. The Dollar Index is about 2% from last week’s high on what we have called a capitulation of sentiment upon safe-have flight. We expect him to reiterate that inflation is not running away and the Dollar to finish the session lower; this should support what is already a very constructive session for Gold.

Technicals: WE HAVE TURNED OUTRIGHT BULLISH IN GOLD AND ALL METALS FROM PRECIOUS TO BASE. We must see today’s momentum hold into settlement, but this could have been a major turning point in the technical and fundamental landscape. Yesterday’s dips have been rejected, creating a bullish handle-like pattern against lower price action across the board. Gold maintained a close above major three-star support at 1192.6 yesterday and this was also technically constructive though it did dip below in the afterhours. A close above 1204 today would be good to see but we need a close above 1210.7-1212.5 to light a fire under this complex.

Bias: Bullish

Resistance: 1204**, 1210.7-1212.5***, 1227-1228.5**, 1235.6**, 1244.6-1251.6***

Pivot: 1198.6-1198.9

Support: 1192.6***, 1187.8**, 1179.7-1182.8***, 1167.1**, 1123.9***

By Bill Baruch

Contributing to kitco.com

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info@bluelinefutures.com.

www.bluelinefutures.com.