Gold Takes A Hit, But Keeps Standing
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Last week’s close: Settled at 1400.1, down 20.8 on Friday and down 13.6 on the week
Fundamentals: Gold is holding the psychological $1400 mark after the latest gut-shot Friday when job growth came in better than expected. As we discussed in the S&P section, the better headline number began pricing-out a 50-basis point cut by the Fed at their July 31st meeting. Still, they are fully expected to cut 25 basis points later this month and the odds sit at 50% that they cut 75 basis points this year. The biggest risk to Gold is a strengthening Dollar due to a less dovish Fed or a less bad economic landscape domestically but we continue to find the overall picture for the metal bullish unless the odds begin pricing-out the 25-basis point cut later this month. With volatility in Gold at the highest since last February and the average 5-week range at the highest since Q4 2016 when Gold was selling off, we must lean on the technicals.
Technicals: Gold’s recovery last Tuesday after testing major three-star support at 1377.5-1380.3 exuded its overall bigger-picture resilience. The metal lost more that $50 from its high Wednesday through Friday, however, a higher low is constructive and price action is buoyed above first key support at 1389.3-1392.6. While we remain long-term Bullish in Bias Gold, support must hold in the near-term. Today’s high was 1409.9 and we still find the 1401.7-1406.9 pocket crucial in developing a favorable landscape near-term; a close above here is Bullish.
Resistance: 1401.7-1406.9***, 1413.7-1418.2**, 1432.9***, 1484.5***
Support: 1389.3-1392.6**, 1377.5-1380.3***, 1361.5***