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Should Gold Traders Lock In Profits?

Commentaries & Views

Yesterday’s close: Settled at 1517.2, up 8.7

Fundamentals: Gold hit a fresh six-year high trading to 1546.1 early this morning. A near record low on the 30-year Bond yield and near inversion of the 2 and 10-year Notes coupled with heightened geopolitical concerns and mounting recession fears around the globe have fueled the latest leg in this bull market rally. Stronger than expected U.S inflation data this morning is pouring cold water over the latest spike. Core CPI was +0.3% MoM and +2.2% YoY, both above expectations and slimming the odds of a 50-basis point cut in September. Global data remains in the forefront with a deluge from China later tonight followed by German Q2 GDP early tomorrow morning.

Technicals: As bulls, we got everything we could ask from Gold in the last 24 hours. First a direct test to 1500 coming out of the weekend that held. Next, a firm settlement that carried into the overnight before a decisive move out above our previous upside target at 1523.9-1526.7. Yesterday, we said, we must see a close out above here in order to maintain our near-term Bullish Bias. This level, adjusted slightly, now comes in as major three-star support today; we must close above here. However, given the CPI data, traders should be locking in some profits.

Bias: Bullish/Neutral

Resistance: 1588.2***

Support: 1523.9-1527.9***, 1516.7**, 1498.6-1500**, 1494.5**, 1484.5-1487.2***

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