Will Shifting Growth Landscape Weigh Down Gold
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Featuring views and opinions written by market professionals, not staff journalists.
Last week’s close: Settled at 1412.2, up 5.5 on Friday and up 12.1 on the week
Fundamentals: This is an ideal landscape for Gold, the most prominent question is whether U.S growth is beginning to turn a corner. This would be a story pricing down Fed rate cut expectations, firming the U.S Dollar and lifting Treasury yields. Today’s NY Empire State Manufacturing, although nothing to write home about, did come in better than expected. We will hear what NY Fed President Williams has to say at 7:50 am CT. This morning, the odds of a 50-basis point cut on July 31st sit at their highs at 27%. Global growth is now starting to show its first bright spots, the question is whether this is a dead-cat bounce or something more. We view three (months or one quarter) as a trend. Last week, Eurozone Industrial Production was less-worse than expected. Data out of China last night was much stronger than expected headlined by the pace of growth in Industrial Production.
Technicals: Price action ripped strongly higher into Thursday’s session before settling in a bit. The tape is remarkably firm and in a healthy wedge consolidation pattern and given that this wedge is holding the breakout above its 5-year ceiling, its is overall very bullish for the long-term. Still, we must continue to see a constructive technical landscape upon pullbacks, and we look to be seeing the latest consolidation back now after first key resistance at 1420.5-1420.9 held overnight. Holding and hugging 1408-1408.5 on a closing basis is very bullish.
Resistance: 1420.5-1420.9**, 1432.9***, 1484.5***
Support: 1408-1408.5***, 1400.5-1403.5**, 1389.3-1392.6**, 1377.5-1380.3***, 1361.5***