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Gold Investors Keep To Keep On The Gas To Avoid Market Stalling Again

Commentaries & Views

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Yesterday’s close: Settled at 1296.3, down 5.5

Fundamentals: Gold is firmed up ahead of U.S hours as the global landscape exuded a higher degree of uncertainty with slower China data and underwhelming growth confirmed in the Eurozone. The Dollar is holding positive and this has kept Gold from extending gains despite a contraction on headline Retail Sales. However, NY Empire State Manufacturing for May was very healthy. We await Industrial Production data at 8:15 am CT, Fed Governor Quarles speaks at 8:30 am CT and March Business Inventories are out at 9:00 am CT. Yesterday, Kansas City Fed President and 2019 voting member George advised against cutting rates even with a looming trade war in order to avoid inflating asset bubbles that lead to a recession; look out for Fed speeches to dial in on this theme, who agrees and disagrees. There is currently a 76.1% probability the Fed cuts rates this year and now a 16.7% probability they do this at their next meeting June 19th. As long as the Dollar does not accelerate today and risk-assets remain under slight pressure at minimum, the landscape should remain favorable for the metal.

Technicals: Gold has struggled to hold out above 1301.5 but on a positive note, major three-star support at 1291.3-1295 has kept the bulls in charge. Given Monday’s surge, there is a potential bull flag in development so as long as that support holds. Still, we need to see gains extended in order to keep feeding the party and avoid another stalled rally.

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