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David Becker
Comex Gold

Gold prices were hammered on Monday as the dollar gained traction and riskier assets are buoyed as market sentiment improved in the wake of the G20 meeting.  Trump delayed additional tariffs on Chinese goods while talks resume, and China said that it would resume purchasing agricultural products.  Existing tariffs will remain in place. Geopolitical tensions eased a Trump made a surprise visit to North Korea and the Demilitarized Zone, while Iran countered this good news with an increase in nuclear production.

Technical Analysis

Gold prices tumbled 1.8% on Monday, slicing through short term support which is now seen as resistance near the 10-day moving average at 1,398. Support on the yellow metal is seen near the 50-day moving average at 1,318. Medium term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The fast stochastic accelerated lower reflecting accelerating negative short term momentum.

Geopolitical Tension Eases Allowing the Dollar to Rally

Geopolitical tensions eased as Trump made a surprise visit to the Demilitarized Zone and became the first US President while in office to set foot in North Korea.  Teams from each side will resume talks over the next few weeks. The dollar gained as the Euro slump following EU data for June which was released on Monday which showed weak Eurozone final June manufacturing PMI readings.  The headline Eurozone reading fell to 47.6 from the 47.8 flash reading.  Germany worsened to 45.0 from 45.4 flash, while France worsened to 51.9 from 52.0 flash.  Spain fell to 47.9 from 50.1 in May, whilst Italy fell to 48.4 from 49.7 in May.  In Germany unemployment was reported which showed initial claims fell -1k while the rate remained steady at 5.0%.

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