Gold Prices Reinvigorated
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Yesterdayâ€™s close: Settled at 1412.5, up 12.00
Fundamentals: Gold ripped more than 2.5% from yesterdayâ€™s low to a high of 1429.4 overnight after Fed Chair Powell signaled the Federal Reserve is ready to cut rates later this month. His testimony reinvigorated the probability of a 50-basis point cut to near 30%. Powell testifies before the Senate Banking Committee today at 9:00 am CT. The big news this morning was CPI data which came in stronger than expected with the Core read at 2.1% versus 2.0% YoY and +0.3% versus +0.2% MoM. This was the strongest Core MoM read since January 2018 and will offset some of Fed Chair Powellâ€™s work. One area of concern for Gold is the steepening yield curve yesterday with the 30-year Bond losing ground yesterday but the short end of the curve the 2â€™s and 5â€™s actually finished green. We do believe that Treasury yields can broadly tick up a bit without cratering the landscape for Gold as long as the Dollar does not accelerate higher. We look to a slew of Fed speakers into the evening with NY Fed President Williams at 10:10 am CT, Atlanta Fed President Bostic speaks at 11:15, Richmond Fed President Barkin at 11:30, Fed Governor Quarles at 12:30 and Minneapolis Fed President Kashkari later at 4:00 pm CT. We also have a 30-year Bond Auction at noon CT.
Technicals: The good news is Gold decisively closed out above major three-star resistance at 1408 yesterday. The bad news is that it has, for now, failed at our next major three-star resistance at 1432.9 for the fourth time, a level it has not closed out above. There are a number of strong support levels below; the most constructive, of course, would be holding 1413.4-1414.3. However, we view this as a near-term bullish tape as long as it holds above 1408-1408.5. Still, because of the test to 1432.9 and retreat, a level that traders must capitalize against, we have reduced our Bullish Bias in order to exude the trading range.
Resistance: 1432.9***, 1484.5***
Support: 1413.4-1414.3**, 1408-1408.5***, 1400.5-1403.5**, 1389.3-1392.6**, 1377.5-1380.3***, 1361.5***