This Week Is A Critical Test For Gold
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Last week’s close: Settled at 1200.4, down 3.9 on Friday and down 6.3 on the week
Fundamentals: Average Hourly Earnings beat expectations on Friday coming in at 0.4%. This was the first beat since May and the highest since December’s revision to the same mark. The Dollar Index gained only 0.36% on the session and Gold did not spike $10-15 lower. We believe this speaks very loudly to Gold’s bottoming process in that the sellers have already sold. Gold could not gain fresh selling even from the algos upon Friday’s very good jobs report. This will be a critical week for the metal and there is now a tremendous emphasis on Thursday’s CPI inflation read. The Chinese Yuan is weaker today and likely holding back the metal. This comes despite strong than expected CPI and PPI from China last night. However, this was likely offset by China’s Trade Balance data Friday night showing a new record surplus to the U.S; this assumingly does not help trade negotiations.
Technicals: Gold settled below the 1204 mark on Friday and the weakness into this morning is unfavorable. Still, first key support is holding, and major three-star support sits just below. Gold is testing into a critical level, one in which will define the recent constructiveness at the psychological $1200 mark. We are upbeat until major three-star support gets taken out.
Resistance: 1210.9-1214.9**, 1220.7***, 1227-1228.5**, 1235.6**, 1244.6-1251.6***
Support: 1193.9-1195.1**, 1187.6-1189.5***, 1178.5-1179.8**, 1167.1***