Gold Silver Reports (GSR) – Gold Price Sell-off Deepens Despite Rising Tariff, Trade War Concerns – Gold prices posted an outside weekly reversal off resistance off yearly open resistance earlier this month with the subsequent decline now approaching a series of parallels which could offer some near-term support. The region of interest is $1255/60. Keep in mind that weekly momentum has fallen to its lowest levels since January 2017 and further highlights the downside risk for bullion.
A break below this slope targets the 50% retracement of the late 2016 advance at $1245 backed closely by the 200-week moving average / trendline support at $1235. Weekly resistance stands at $1285 with bearish invalidation steady at the 52-week moving average / 2018 open at $1298/$1302.
Bottom line: A break of the June opening range has me looking for a late-month low in price. That said, look for possible recovery next week to offer more favorable short-entries while below the yearly open. For a complete technical breakdown of the near-term Gold price levels (daily & intraday), review this week’s XAU/USD Technical Outlook.
Trade War Concerns
TARIFFS STOKE TRADE WAR CONCERNS
The intensification of rhetoric between China and the U.S. has continued to weigh on market sentiment as investors weigh the impact of an all-out trade war between the world’s largest economies. While these concerns would typically be supportive for the yellow metal, expectations for higher rates and persistent strength in the US Dollar have kept prices under pressure with gold breaking to fresh yearly lows this week.
Things have been quiet on the data front but look for that to change next week with U.S. Durable Goods Orders and the third and final read on 1Q GDP on tap. Highlighting the economic docket will be the May read on Core PCE (personal consumption expenditure) on Friday. Consensus estimates are calling for an uptick in the Fed’s preferred inflationary gauge to 1.9% y/y. A strong print here would likely see traders continue to price in a fourth rate-hike from the central bank this year- a scenario that would weigh on gold prices.
Read More: Crude Oil Bounces as OPEC Adopts Underwhelming Production Increase
As it stands, expectations are for a 25bps hike in September with December Fed Fund Futures hovering just under 50%. That said, there’s room for adjustment and strong US data will continue to fuel these expectations. Keep in mind that the central bank will now be holding press conferences at each policy meeting and offers committee members more flexibility with respect to the timing of subsequent hikes. For gold, the focus is on technical support just lower and while prices may see a near-term reprieve next week- the broader risk remains weighted to the downside… for now. – Neal Bhai Reports (NBR)
Gold Investing? Look Away Now
The yellow metal nearly sent traders to sleep over the first 5 months of 2018 trading in its tightest price range since the early 1970s. All it has done since then is lose another $50 per ounce giving up its latest assault on the $1300 level.
Lucky for pundits however, gold investing is never about the metal. Gold doesn’t pay any interest or post any quarterly numbers. Barely one-tenth of annual demand comes from industrial use. Gold does so little in fact, it can’t even rust.
So for investors trying to decide which way they think prices will go, gold is really about everything else. Think of it as the ultimate ‘Zen’ investment. To figure out gold, look away from the metal and meditate on everything else. And away from the bullion market right now, you’ll find plenty to think on.
