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Gold holding its ground but the fight's just starting

Commentaries & Views

Last week’s close: Settled at 1511.4, down 3.4

Fundamentals: Gold continues to hold ground despite a mixed landscape. Friday’s Nonfarm Payroll report was strong, European Manufacturing this morning was better than feared, stocks are at record highs and U.S and China are nearing a “Phase One” deal. Given all of this, the odds of a fourth cut in December have dissipated to 8% this morning. Still, ISM Manufacturing on Friday contracted worse than expectations and this helped Gold hold ground in the second half of Friday’s session amid fresh comments on trade. Factory Orders are due at 9:00 am CT today and ISM Non-Manufacturing is tomorrow. We are unequivocally bullish Gold in the intermediate and long-term but if those two data points come in better than expected, we would imagine Gold slipping back below $1500 unless stocks make a U-turn.

Technicals: We took a very Neutral approach into Friday given the gauntlet of an economic calendar. Price action was very favorable, and Gold again finds itself battling at a crucial level of technical resistance at 1509-1515.6. It could not achieve a close above here but continues to hold ground against the level. Given a more stagnant tape since the spike early Friday, our momentum indicator now closely aligns with this pocket which also brings Friday’s settlement. Gold has its work cut out for it, but the tape remains favorable and extremely constructive above 1505.

Bias: Neutral/Bullish

Resistance: 1511.6-1515.6***, 1527.5***, 1540-1543.3***

Support: 1505**, 1495.8-1496.8**, 1484.5-1490.7***, 1465**, 1450-1454***, 1413.2***

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