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Gold needs to hold its ground this week

Commentaries & Views

Last week’s close: Settled at 1515.5, down 10 on Friday and down 13.9 on the week.

Fundamentals: Gold is holding ground today and ignoring the sharp 3% increase in 30-year Bond yields. The Dollar Index is down slightly again today buoying Gold. The DX has incurred more than a 1% reversal from last Tuesday’s new high ahead of ISM Manufacturing. Better ISM Non-Manufacturing and Factory Orders Thursday pressured Gold and the technicals added selling. Nonfarm Payroll was mixed on Friday; wage growth beat but job growth missed. The economic calendar is more or less quiet in the first half of the week, but Thursday will be the highlight; the ECB is expected to announce a rate decision at 6:45 am CT, they are expected to cut 10 basis points and U.S CPI is due at 7:30 am CT. If Gold can hold ground in a fundamentally and technically constructive manner ahead of this, Thursday will be a defining momentum in the near and intermediate-term for Gold as it leads into next week’s Fed meeting.

Technicals: There are two trendlines that can be drawn for Gold defining support and resistance. The first is from July 3rd and Gold traded out above here August 6th, it connects with the August 13th low; it is now support at 1511. The second is from the August 13th and August 22nd low; it was violated last week and now brings resistance at session highs. A close outside of this range will provide a slight directional move, likely into Thursday. However, the larger range is defined by major three-star resistance at 1531.9 and a close above here is needed to neutralize last week’s weakness. To the downside $1500 has become a line in the sand with support at 1484.5-1487.2 also bringing significance.

Bias: Neutral/Bullish

Resistance: 1523**, 1531.9***, 1542.4-1546.4**, 1565**, 1588.2***

Support: 1510.7**, 1498.6-1500***, 1484.5-1487.2*** 

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