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Mid-December Still The Best Time To Buy Gold

Commentaries & Views

Yesterday’s close: Settled at 1229.8, up 9.9

Fundamentals: Fed Chair Powell certainly confirmed a hole or two in the Fed’s hawkish armor by saying interest rates are “just below neutral”. Although this doesn’t give tremendous clarity considering that neutral is said to be between 2.5-3.5%, it does emphasize that the Fed will be data dependent and is not on a preset path. We expect growth headwinds domestically and abroad coupled with dissipating policy tailwinds and the impact of the Fed’s tightening to do the leg work in slowing the Fed’s path of future hikes. For now, this is a strong move for Gold that was further confirmed this morning by softer than expected PCE data (the Fed’s preferred inflation indicator). Still, traders do not want to get ahead of themselves with next week’s payroll number in the crosshairs. Our narrative continues to be one in which we like the long side but prefer to stay nimble. We continue to eye mid-December as the green light for Gold; when to back up the truck. The FOMC will release the Minutes from the most recent meeting at 1:00 pm CT today. Chicago Fed President Evans, a voting member in 2019, also speaks at that time.

Technicals: Gold is trading very well on a daily and weekly chart, however, while we remain and unequivocally Bullish, we must acknowledge the near-term technical headwinds. Major three-star resistance comes in at 1236.5-1239.3. Our pivot today is 1227.2 and a continued close above here leaves the bulls in the clear driver’s seat. A close below the 50 and 100-day moving averages that come in at 1222 area will be disappointing and lead to further bleeding.

Bias: Bullish/Neutral

Resistance: 1233*, 1236.5-1239.3***, 1250-1252***

Pivot: 1227.2

Support: 1222.5-1222.8**, 1215.5-1216.8**, 1202.4-1208***

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