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Don't chase gold prices

Commentaries & Views

Last week’s close: Settled at 1648.8, up 28.3 on Friday and up 62.4 on the week

Fundamentals: Gold matched its best week since June, gaining nearly 4%. We pointed heavily last week to the 3-month Bill and 10-year Note yields inverting and this being a key factor paving a bullish road for the metal. Now, risk-assets are starting to catch up to some of the underlying signals such as the yield inversion and Friday’s whiff on Services PMI data was the last straw. The most amazing part is that Gold has been able to rally with such ferocity despite U.S Dollar strength.

Technicals: Gold is very bullish out above our momentum indicator which comes in this morning at 1662, however, just as we said in the Crude section, we are not increasing our Bias in order to exude patience in strategy and not to encourage chasing a move. There is strong support below the market adding to the bull case. Major three-star support comes in at 1645.9-1648.8 aligning Friday’s close with a previous level.

Bias: Neutral/Bullish
Resistance: 1687**, 1716***
Pivot: 1662
Support: 1645.9-1648.8***, 1615-1619.6***

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