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Look For Short-Term Correction In Gold

Commentaries & Views

Yesterday’s close: Settled at 1292.3, down 1.5

Fundamentals: Gold has slipped by nearly 1%. This began after midnight as global equity markets are responding to yesterday’s reports that the U.S is weighing lifting the tariffs on China; less demand for safe-havens. Gold and the Chinese Yuan have both recovered firmly since October which means that positive news on trade does not have the same impact in the past given that there is nothing for them to price-in anymore. NY Fed President Williams said this morning reiterated patience and data dependence. He noted that uncertainties have risen, the lack of data due to the shutdown and that it could also affect consumer spending. Industrial Production beat expectations this morning which added pressures to the metal.

Technicals: Price action has fallen out of the wedging pattern Gold developed since the start of the year. First key support comes in at 1278.1-1282.3 and we remain long-term bullish Gold. However, we have noted here that we are welcoming price action down to 1270.3 and what is now major three-star support at 1260.8-1263.8 which aligns three massive indicators. We remain unequivocally bullish Gold and this could be the start of a very healthy correction. Only a close back above 1289.6-1292.3 is again near-term bullish.

Bias: Bullish/Neutral

Resistance: 1289.6-1292.3**, 1298-1300***, 1313-1320**

Support: 1278.1-1282.3**, 1270.3**, 1260.8-1263.8***, 1250-1256.4**, 1245.3**, 1236.2-1236.7***

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