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Gold's Rally Is More Than A Dead Cat Bounce

Commentaries & Views

Yesterday’s close: Settled at 1231, up 0.7

Fundamentals: Gold is holding ground extremely well and trading 0.5% from its overnight low despite the Dollar Index gaining 0.4% and the Dollar gaining 0.25% against the Chinse Yuan. Geopolitical uncertainties tied to the disappearance of the Saudi journalist, a Brexit impasse and a softer risk-on sentiment around the globe have all supported the metal. It is great to see Gold exude its safe-haven characteristics in the face of Dollar strength. Building Permits and Housing Starts missed this morning and this has kept buyers at the table for the metal. Later today Fed Governor Brainard speaks at 11:10 am CT, Bundesbank President Weidmann speaks at 11:30 am CT and the Federal Reserve release the Minutes from its September rate-hike meeting at 1:00 pm CT.

Technicals: Gold has exemplified the characteristics of a commodity in a bull-market, not simply of one that is in a dead cat bounce. Still, we must see more, but this is a terrific start considering that CoT Managed Money was at record net-short position as of last Tuesday. The overnight pullback battled tremendously against major three-star support and this sets the table for the bulls to take the reins today. Traders must also keep a close eye on Silver which is battling at its 50-day moving average, Silver needs to cooperate in order for Gold to extend gains to our target at 1244-1250.

Bias: Bullish/Neutral

Resistance: 1240.5*, 1244-1250***

Pivot: 1230

Support: 1219.6-1220.7***, 1213.2**, 1204.3-1205.9***

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