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Gold Caught Between U.S. Dollar And Bond Yields

Commentaries & Views

Yesterday’s close: Settled at 1286.3, up 3.8

Fundamentals: Gold continues to hold ground despite U.S Dollar strength as the risk landscape remains uncertain. The second look at Q1 GDP data was in line with expectations being revised down to 3.1% from 3.2%. Weekly Initial Jobless Claims came in better than expected, however, helping Gold is a higher read on Wholesale Inventories. This narrative on bloated inventories is expected to drag Q2 GDP which falls more in line with the weak PMI reads rather than 3.1% GDP in Q1. Although the Dollar has stolen Gold’s immediate safe-haven attraction, Treasury yields at or near 18-month lows is buoying the metal. Pending Home Sales are due at 9:00 am CT and Fed Governor Clarida speaks at 11:00 am CT.

Technicals: Gold faces major three-star resistance at 1288.2 a level in which the August contract was able to notch but truly not hold over the last week. Given the consolidation of weakness, a constructive close above there should bring a breath of fresh air towards 1300. There is a lot of support below and for the August contract 1274.6-1279.2 aligns the lows and the 200-day moving average.

Bias: Neutral

Resistance: 1288.2***, 1292-1295.1**, 1300**, 1307.8-1310.1***

Support: 1274.6-1279.2***, 1267.3**, 1255-1260.6***

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