Gold Is On Track To Make A New Yearly High
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Featuring views and opinions written by market professionals, not staff journalists.
Last week’s close: Settled at 1311.1, up 18.7 on Friday and up 21.9 on the week
Fundamentals: Gold roared higher as risk-sentiment worsened late last week after President Trump said he plans to impose tariffs on Mexico if they do not curb illegal immigration. This is key to understand in that it has weakened the Dollar, supporting Gold and it is a conflict on another front not involving China thus not further weakening the Yuan. Treasury yields continued to press roughly 18-month plus lows with the 10-year touching a low of 2.073 early this morning. Also, the S&P lost nearly 3% last week. Lower Dollar, lower yields and lower stocks is a recipe of great success for Gold. Preliminary May U.S Manufacturing PMI came in 50.6. As far as our records go back, only the revised read on May 2016 was worse at 50.5. Given that global PMIs from Germany to China have been in contraction for months, conditions would be set to worsen if the U.S begins to cave.
Technicals: Gold is near, intermediate and long-term bullish out above 1306.8-1310.1. Our next major three-star resistance level comes in at 1327.7 and this could keep a lid on price action for a day or two but if current technical and fundamental conditions persist, Gold is on track to set a new high for the year before the end of the month. Only a close back below 1306.8-1310.1 will signal a failure.
Resistance: 1327.7***, 1335.7**, 1349.8***, 1361.5***
Support: 1306.8-1310.1***, 1292-1295.1**, 1288.2***