Gold Prices Reinvigorated
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Yesterday’s close: Settled at 1412.5, up 12.00
Fundamentals: Gold ripped more than 2.5% from yesterday’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 Powell’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 2’s and 5’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***