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Gold Flirts With $1400

Commentaries & Views

This morning gold pricing opened under pressure immediately trading to its lowest price point today at $1387.50. By 11:00 AM EDT gold prices had risen slightly above $1400 per ounce as it hit the intraday high today of $1402.40 and as of 5:00 PM EDT gold futures basis the most active August contract fixed at $1399.60, which is a net decline of $0.40 on the day.

This tepid move as well as a contracted range is a direct result of traders awaiting testimony by the Federal Chairman Jerome Powell, who will be speaking to a Senate panel on Thursday. Market participants, investors and traders will listen intently for any indication as to the Federal Reserve’s current timetable and target to cut interest rates.

Any rate cut would be initiated at the end of this month when on July 31st the FOMC meeting will convene. The Federal Reserve will have to continue a subtle but precise balancing act, to stimulate and expand economic growth in light of the recent and robust Job’s report which the Labor Department released last week.

Add to that the current undertones of geopolitical issues and hotspots are certainly events that the Federal Reserve must consider as it modifies its current monetary policy. These issues and hotspots include the current trade war between the United States and China, and the recent comments coming out of Iran which has been labeled as sable rattling. The most recent statements by Iran Have indicated that they will deepen the breach in its nuclear agreement with United Nations until the United States eases the stringent economic sanctions currently placed against Iran.

Collectively these upcoming and active events have resulted in many analysts becoming more bullish on the precious yellow metal with forecasts of defined gains in gold throughout this year as well as 2020. UBS, for example, has issued a call for $1450 an ounce gold by the end of the year, and is high as $1500 per ounce in 2020.

Whatever the outcome of this week’s testimony by Chairman Powell it seems logical that gold will continue this historic price increase now that pricing has broken above the long-standing glass ceiling at $1370. On a technical basis, we see major resistance at $1442 per ounce with major support at $1385.

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Wishing you as always, good trading,

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