USD Putting Immense Pressure On Gold
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Last week’s close: Settled at 1208.6, down 16.5 on Friday and down 24.7 on the week
Fundamentals: U.S Dollar strength has put immense pressure on Gold. The Euro is making a new low on the year against the Dollar and the Yuan has now lost 1% since November 2nd. A hawkish tone from the Federal Reserve at last week’s policy meeting coupled with a hot PPI number has been a major catalyst in the Dollar strength. While seasonal weakness for the metal has added weight to the tape, the Fed and inflation will be put to the test this week. Today, San Francisco Fed President Daly, a voting member in December, speaks at 1:30 pm CT. She and Fed Governor Brainard speak tomorrow. Most importantly, Fed Chair Powell speaks Wednesday and Thursday. Also, the more closely watched CPI inflation read is due out Wednesday.
Technicals: On Friday, Gold traded to the lowest level since the October 11th spike and is now eyeing major three-star support at 1197.2-1200. This level aligns multiple technical indicators as well as a trend line from the low. Below here though, there is not much support until 1184-1186 so buyers must be careful, manage risk and understand we may not see a confirmation for an adverse move higher until Wednesday.
Resistance: 1213.3-1215.8**, 1223.6-1225.1**, 1229.5**, 1233.5-1238.3**, 1244-1250***
Support: 1197.2-1200***, 1184-1186***