- Gold the Commodity or Gold the Currency?
- Weekly Price & Time: Critical Test Coming Up For Gold
Gold prices are lower for a third consecutive week with the precious
metal off by 0.90% to trade at $1295 ahead of the New York close on
Friday. The losses mark a 2.47% decline for the month of July and come
amid renewed strength in the greenback with the Dow Jones FXCM Dollar
Index breaking through trendline resistance dating back to the 2013
high on the back of a stellar 2Q GDP print and a more upbeat assessment
of the economy from the Federal Reserve. However with a miss on the
July employment report and a massive sell-off in broader equity
markets, the gold bulls may not be ready to give up just yet.
From a technical standpoint, the July calendar month proved to be a
textbook opening range play with the break of the initial monthly lows
on the 14th shifting the bias to the short side mid-month. The end
result saw gold close July AT THE LOWS before rebounding off near-term
support on the back of Friday’s NFP miss. Support now stands at the
61.8% retracement of the June advance at $1280 and this level will now
serve as our initial range low as we open up August trade.
Key support and our bullish invalidation threshold rests just lower in the zone between $1260-$1270- a region which is defined by key longer-term Fibonacci ratios and has served as a major pivot in gold dating back to June of 2013. Resistance stands at last week’s high at $1312 and is backed by our bearish invalidation level at $1320/21. Friday’s rally has now pared the entire Thursday decline and with the USDOLLAR index looking to post an outside reversal candle at fresh three-month highs, the risk for a near-term continued push higher in Gold (lower in USD) to open the month remains. As such, while our broader outlook remains weighted to the downside we’ll maintain a more neutral tone heading into the start of the month pending a break of the initial July opening ranged. Bottom line: looking for an early-mid month rally to sell.
