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Gold Investors: Watch Technicals; Support Needs To Hold At $1,415

Commentaries & Views

Yesterday’s close: Settled at 1418.7, up 0.5

Fundamentals: Gold is on its back heels this morning after less dovish comments from Fed Chair Powell and the lone dissenter last week St. Louis Fed President Bullard. A 25-basis point rate cut at the July 31st meeting is still fully priced in but now the odds of a 50-bp cut have slipped to 28.1% from 40.5% one day ago. While headlines point to positive jawboning by Treasury Secretary Mnuchin that a trade deal is/was 90% in place, we see Gold’s reaction merely as a kneejerk reaction to this primarily because of the Fed speak. In fact, we imagine a trade deal takes the safe haven winds out of the Dollar and a stronger Euro and Yuan support Gold as long as there is no proof global growth has turned a corner. This morning, headline Durable Goods came in better than expected but the overall read was underwhelming. Today, the technicals will be key.

Technicals: Gold spiked to a high of 1442.9 yesterday but remained tethered to the 1432.9 level until Fed Chair Powell’s comments. Even after that, the direct hit to first key support at 1415.4-1418.2 held and actually provided a nice swing trade opportunity, something we pointed to here. However, while Bullish in Bias, we also said this market is susceptible to sharp pullbacks. Still, the bulls will remain in the driver’s seat above 1396.9-1400.1; a close below here will begin to encourage a multi-day consolidation lower.

Bias: Bullish/Neutral

Resistance: 1432.9***, 1484.5***

Pivot: 1415.4-1418.2

Support: 1396.9-1400.1***, 1392.6**, 1377.5-1380.3***, 1361.5***

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