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Gold Investors Still Waiting For the Short Squeeze

Commentaries & Views

Yesterday’s close: Settled at 1216, up 2.7

Fundamentals: The Dollar is weaker, the Yuan is stronger, and Gold nudged a new swing high above 1220. The currency trade has allowed Gold the opportunity to recover but we have not even begun to see a squeezing of shorts in the metal. Today, the currency aspect finds itself at a very critical juncture on a technical basis; the Dollar is moving below support across the board and this could easily encourage at least a 1% follow through in both the Euro and the Yuan. This comes as the safe-have premium comes out of the Dollar and this can also be seen with Treasury prices bleeding lower. This will prove to be a bit of a tug-of-war with rates now that Gold has regained ground. Still, the most important aspect for now is the Dollar. Goods Trade Balance and Wholesale Inventories both missed this morning, and this should weigh on the Dollar. Case Shiller Housing Index is due at 8:00 am CT and most importantly Consumer Confidence is due at 9:00 am CT.

Technicals: We remain Bullish in Bias Gold but have begun to Neutralize our emphasis just a bit after such a firm move higher. We noted in both the Midday Market Minute and FX Rundown yesterday that traders must capitalize on this rip higher after pressing positions early Friday. Still, first key resistance comes in at 1227-1228.5 and this will prove to be a tough area to get above upon the firs test. Support now comes in at 1210.7-1212.5 while we have moved our three-star level to 1204.

Bias: Bullish/Neutral
Resistance: 1227-1228.5**, 1235.6**, 1244.6-1251.6***
Support: 1210.7-1212.5**, 1204***, 1196.9**, 1191.2**

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