Lower Gold Prices Offer Better Value
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Yesterday’s close: Settled at 1219.9, down 8.8
Fundamentals: We have warned for week’s that traders must approach this market with a short-term mindset; dips are to be bought but you must capitalize on the rallies as strong technical resistance (discussed in the ‘Technical’ section below) sits overhead and this is a not a seasonably favorable time for Gold. This coupled with yesterday’s options expiration and U.S Dollar strength hammered Gold in its worst session in nearly three weeks. The good news, we welcome this lower price action! It will give us much better value when looking to buy in the coming weeks. Is the low in yet? We don’t think so, and traders will capitalize on patience.
The second look at Q3 GDP was softer than expected and both Wholesale Inventories and Goods Trade Balance were light. New Home Sales are due at 9:00 am CT. All eyes will be on Fed Chair Powell at 11:00 am CT. Though we do not believe he will show more than a hole or two in his hawkish armor ahead of the December 19th FOMC Meeting, there may be expectations built for such that could be counterproductive for Gold. Feel free to call our trade desk at 312-278-0500 to discuss the landscape.
Technicals: Gold settled below the 50 and 100-day moving averages yesterday and this level will be a line in the sand to neutralize the weakness. Was yesterday’s move a surprise? Certainly not, it was overdue for the metal after stalling against major three-star resistance that now comes in at 1231-1236.7. A continued hold of 1215.5 and close above 1219.5 is very constructive. When we reference being patient, we are eyeing a test to 1202.4-1208 as a buy opportunity.
Resistance: 1222.2-1222.8**, 1231-1236.7***
Support: 1215.5*, 1202.4-1208***