Gold Holding At One-Month High
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Yesterday’s close: Settled at 1246.6, up 7.0
Fundamentals: Gold is holding at the highest level in a month. Government data for today including the private ADP Survey and ISM Non-Manufacturing have been rescheduled for tomorrow. The Dollar has stabilized slightly from the low early in Tuesday’s session. Yesterday’s risk-off move which was most notable in equity markets did not help Gold. Treasury prices surged higher on the tailwind provided by the 5yr yield dipping below the 3yr yield in an inversion. Although this is a very favorable landscape for Gold as it invigorates recessionary fears, the other catalyst in the risk-off move was the diminished expectations of the 90-day trade truce between the U.S and China. This encouraged the Dollar’s strength in the second half of yesterday’s session. Furthermore, an additional tailwind for the Dollar was provided by comments from NY Fed President Williams who sees continued rate hikes. All in all, as we stated above, Gold is holding very well, however, traders must understand the significance of Friday’s Nonfarm Payroll report when positioning.
Technicals: We remain unequivocally Bullish in Bias Gold, especially for the long-term. The chart has been extremely constructive in recent days, but this is also when you must be on the lookout for potential technical (and fundamental with Nonfarm Payroll) headwinds; major three-star resistance is at 1250-1252. Traders should capitalize or protect downside risk in some manner. First support is holding, and this aligns with the previous swing highs, above here the tape is bullish. Major three-star support does not come in until 1225 and this aligns a trend line, the 50-day moving average and the 50% retracement on the range from the low on November 13th; we view Gold as a strong buy at this level.
Resistance: 1250-1252***, 1268.3**
Support: 1236.7**, 1230*, 1225***, 1216.8-1219.6**, 1202.4-1208***