Dismal data creating a tailwind for gold
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Featuring views and opinions written by market professionals, not staff journalists.
Yesterday’s close: Settled at 1496.7, up 6.0
Fundamentals: Gold is surging higher this morning and the continued dismal data has added a tailwind, but the true spike came upon reports that Chinese officials doubt the long-term sustainability of a trade deal. Furthermore, it really seems China has no intent in following through with a bulk of the substantial issues. As for that data; Chinese Manufacturing PMI, weekly Jobless Claims and Chicago PMI all missed. What helped lay the groundwork here though was yesterday’s price action against strong support amid what was initially seen as a hawkish Fed cut. Fed Chair Powell threaded the needle though saying the committee does not plan to raise rates unless inflation was significantly higher persistently. The Fed’s preferred inflation indicator the PCE Price Index was 1.7% versus 2.0% this morning. The last foreseeable near-term hurdle for Gold is tomorrow’s Nonfarm Payroll and ISM Manufacturing.
Technicals: Gold is through the 1499-1503.2 barrier and this also aligns with our momentum indicator today. We are Bullish Gold while it holds out above here. Still, strong resistance comes in at 1515.6-1518. In recent weeks, Gold has quickly become exhausted once achieving a strong wave of resistance all the way up to 1527.5 and good repair into and through here by the weekly close tomorrow will go a long way in reinvigorating bullish volatility.
Resistance: 1515.6-1518***, 1527.5***, 1540-1543.3***
Support: 1499-1503.2**, 1484.5-1491***, 1465**, 1450-1454***, 1413.2***