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James Hyerczyk
Comex Gold
Comex Gold

Gold futures are trading slightly higher early Monday as aggressive counter-trend investors try to capitalize on a steady U.S. Dollar and Friday’s potentially bullish closing price reversal bottom chart pattern.

At 0332 GMT, December Comex Gold is trading $1224.50, up $1.20 or +0.10%.

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After hitting a 17-month low on Friday, gold rebounded to close higher as investors reacted to mixed U.S. economic data and increased tensions over US-China trade.

On Friday, the U.S. government reported that job growth slowed more than expected in July as employment in the transportation and utilities sectors fell, but a drop in the unemployment rate suggested that labor market conditions continued to tighten.

Additionally, China proposed retaliatory tariffs on $60 billion worth of U.S. goods in response to the Trump administration’s threat of steeper tariffs on the Asian economy.

Also driving the dollar lower on Friday was the announcement that China’s central bank would require banks to keep reserves equivalent to 20 percent of their clients’ foreign exchange forwards positions from Monday, in a move to stabilize the Yuan currency.

In other news, hedge funds and money managers increased their bearish position in COMEX gold contracts to another record in the week to July 31, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.

Forecast

Today’s price action in gold is likely to be determined by direction of the U.S. Dollar. There are no major economic reports so the movement in the dollar is likely to be driven by trade concerns.

The fact that big money is net short gold could have a contrarian influence on the price action.

The daily chart suggests that momentum could shift to the upside if buyers can overcome $1228.60. The minor trend will change to up on a trade through $1237.80 and the main trend will change to up on a move through $1244.70. Of course, a trade through $1212.50 will signal a resumption of the downtrend.

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