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David Becker
Comex Gold
Comex Gold

Gold prices continued to consolidate in a tight range just below resistance near the 10-day moving average at 1,225.  Support is seen near the July lows at 1,211 and then the July 2017 lows at 1,204.  Weaker than expected confidence in Euro was countered by a bounce in U.S. pending home sales which kept the yellow metal stable.  Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal which points to accelerating negative momentum. Momentum as reflected by the MACD is unchanged as the index is printing near the zero index level with a flat trajectory which reflects consolidation.

With yields in the U.S. having a difficult time breaking through the 3% market for the 10-year treasury, gold prices have remained buoyed.  The 10-year yield should be the tell for traders. A break through the 3% mark, should increase the yield differential over German yields providing an impetus for a rally in the U.S. dollar, paving the way for lower gold prices.

Traders Await Payroll Report

While inflation in Europe is climbing providing the backdrop for a stronger than expected Euro, traders await this weeks employment report from the Department of Labor.  Expecations are for an increase of 190K jobs and a drop of the employment rate. The dollar has been trading steady, providing the backdrop for a stable gold price.  With little in the way of geopolitics, the yellow metal remains stable.  U.S. yields have been stable over the past 2-weeks after testing the 3% handle earlier in 2018.  The yield curve has flattened which forecasts a potential recession despite a rebound in pending home sales.  Housing data throughout last week were weaker than expected.  New homes sales as well as existing home sales were softer than expected, given the recent increase in rates. Inflation data released in Germany and Spain were in line with expectations allowing the EUR/USD  to remain stable.

 

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