U.S. dollar weighs on gold
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Fundamentals: Gold’s bloodbath yesterday was not surprising given the break below Monday major three-star support and the strength of risk-sentiment; seen through equity rally and weakness in Treasuries. We have continued to pound the table on the importance of Monday’s ISM Manufacturing read and Goldman Sachs’ watered down estimated impact of Coronavirus to global growth (only a hit of -0.1% to -0.2%). Better Services data from the Eurozone and U.K is helping to lift global yields this morning. The Dollar remains strong ahead of a slew of data beginning with the private ADP Survey at 7:15 am CT and followed by ISM Non-Manufacturing at 9:00 am CT. President Trump, in his State of the Union address last night was quick to talk about jobs, showing confidence in the official Nonfarm Payroll report Friday. Better data will weigh on Gold.
Technicals: We turned Neutral in Bias Gold after breaking below strong support at 1574-1578.2. This level will now act as resistance and continued price action below 1560.4-1562.4 will leave the bears with a near-term edge targeting a test to recent lows at 1542.8-1547.6. A close below this strong level of support is bearish in the near and intermediate-term.
Resistance: 1574-1578.2**, 1587.9-1588.2**, 1594.7-1598.5***
Support: 1555**, 1542.8-1547.6****