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Budding market liquidity issues will support gold

Commentaries & Views

Yesterday’s close: Settled at 1513.4, up 1.9

Fundamentals: It’s Fed Decision Day and gold has held ground extremely well above $1500 despite odds of a cut dissipating to a coin flip. As we discussed in the S&P section, we think a cut is now warranted compared to our belief last week that it was not so much. Given the sharp rise in overnight lending rates and the Fed’s repo operation to stabilize rates back to their benchmark, there are budding liquidity issues. A cut should pave the way for higher Gold and Silver prices but traders do want to keep a close eye on Fed Chair Powell’s post-statement press conference in case he throws cold water over the move; he did this on the July 31st cut when he called it merely a mid-cycle adjustment.

Technicals: Gold achieved a close back above the 1510.7-1511.1 level and now it must maintain such. This has reinvigorated our near-term Bullish Bias as we have remained unequivocally long-term Bullish Gold above major three-star support at 1484.5-1487.2. This pop must stick and only a close above major three-star resistance at 1529.1-1531.9 is needed to open the door for a bull leg higher. A failure to hold 1489.6-1500 into today’s electronic close, because settlement is at 12:30 CT and ahead of the Fed at 1:00 CT, will be extremely disappointing and bulls must begin getting out of the way.

Bias: Bullish/Neutral

Resistance: 1520.4**, 1529.1-1531.9***, 1537.9*, 1546-1548.7**, 1565**, 1588.2***

Pivot: 1510.7-1511.1

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

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