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The Fed Is As Dovish As They Can Be

Commentaries & Views

Yesterday’s close: Settled at 1348.8, down 1.9

Fundamentals: Gold settles at 12:30 pm CT so on Fed Days Gold’s intraday action does not digest the statement being released at 1:00 pm CT. The Fed was as dovish as they could be without actually cutting rates. They removed ‘patient’ from the statement and laid the necessary groundwork to cut in July. In fact, a July 25-basis point cut is now fully price in and the odds for 50-basis points have now reached a 34.3% probability. Philly Fed Manufacturing this morning was the latest dismal data point and this should keep buyers interested, even $35/40 higher than yesterday’s settlement.

Technicals: Gold has broken out above the 5-year ceiling and spiked to a high of 1397.7 early last night. Price action came back in quickly and has consolidated since above what is now major three-star support at 1377.5-1380.3; we must see a close above here in order to confirm the breakout. Resistance at 1392.6, the high from March 2014 has kept rally attempts since the spike in-check; a close above there today is bullish. We remain unequivocally long-term Bullish in Bias Gold but are still only cautiously optimistic in the near-term.

Bias: Bullish/Neutral

Resistance: 1392.6***, 1432.9***

Support: 1377.5-1380.3***, 1361.5***, 1348.8***, 1323.6-1330.5****

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