Bad News Is Good News For Gold
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Yesterday’s close: Settled at 1347.9 up 3.1
Fundamentals: Gold has done exactly what we warned yesterday, a healthy consolidation lower. Headlines will tell you how the Fed confirmed their dovish switch in January as they plan to finish the balance sheet unwind this year. Ultimately, those headlines are exacerbating the facts and the Fed more than anything exuded patience. However, markets such as Gold, Treasuries and the Dollar all priced this in already and instead are now seeing a consolidation instead of continuing to move directionally as if the Minutes were truly as dovish. We remain unequivocally Bullish Gold because we believe the Dollar is overvalued and if the Dollar holds its value here because the rest of the world finds itself closer and closer to a recession than Gold will strongly outpace the Dollar’s strength as interest rates hover just above zero for years to come. Today, February Philly Fed Manufacturing was the lowest since 2016 and Durable Goods from December was stable. Weekly Initial Jobless Claims posted their first beat in four weeks. Lastly, the Euro is holding strong despite a contraction in Manufacturing PMI and ECB Minutes that exuded a bit of panic. All in all, this could signal a sentimental bottom for the Euro without fresh bad news which would be extremely favorable for Gold in the coming weeks.
Technicals: Gold stalled right at the landmark $1350 resistance mark and is now consolidating. We remain Bullish Gold and said yesterday to capitalize on strength so that you can buy weakness. Major three-star support comes in at 1331.1-1332.5 and this should bring a solid buy opportunity. Last night’s low was 1334.6.
Resistance: 1350**, 1369.4***
Support: 1331.1-1332.5***, 1327.2*, 1321.7-1323.4***, 1312.9-1315.4**, 1306.3-1306.5***