Gold Extends Gains for the Fifth Day; Weak Dollar and Fed’s Cut Catalyzers

Gold is extending gains for the fifth day in a row as investors are digesting a weak dollar amid speculations of a rate cut in July. XAU/USD is now consolidating levels above the 1,400 area, and it is testing highs since September 2013 at 1,412.

“The weakness of the US dollar, gold’s technical picture, and interest from investors themselves have become self-sustaining factors,” Commerzbank analyst Eugen Weinberg said, “especially after the massive inflows into the gold exchange-traded funds (ETF).”

Technical studies are signaling that gold has more room to the upside, especially after the break above the 1,390 critical resistance on Friday, and the extension on Monday.

On the other hand, FX Empire analyst James Hyerczyk highlights the relationship between gold and US Treasury yields to make a case of a short term weakness.

Hyerczyk says that “although the 10-year Treasury note is trading higher, from a technical perspective, it may have hit its near-term high last week. If we’re going through a transition period from strong to weak then gold could be vulnerable because this means yields will firm over the near-term.”

“This in turn could provide support for the US Dollar index,” Hyerczyk states.

In that point of view, supports are identified in the 1,390 area, then 1,346 and 1,320. To the upside, 1,412 and 1,476 are the resistances to watch.

Metals report for June 24

Silver is opening the week with sideways as XAG/USD was unable to break above the 15.60 level on Friday. Currently, silver is trading 0.12% positive on Monday with the unit pricing at 15.35.

It seems the metal is entering in a consolidation period after the rally performed on Thursday that took the unit out of the 14.60 and 15.10 range traded since April.

Copper is trading weak on Monday, but the unit looks trapped by a small range between 2.678 and 2.718. The range seems at the same time a part of a flag formation following the rally performed on June 18.

Currently, XCU/USD is trading 0.22% negative on the day at 2.6900. Supports are located at the mentioned 2.678, then the 20-day moving average at 2.6590 and the 2.600 area. To the upside, the June 20 high at 2.733 is the level to watch. Above there, a confluence of 50 and 200 days moving averages at 2.750.

Palladium is resuming its uptrend above 1,480 after a brief setback performed on June 20. The XPD/USD is now 1,515, 1.0% positive on the day. The unit looks well supported by the 1,480 area.

Platinum is trading positive on Monday, but it remains inside the range between 800.00 and 820.00 traded since the first week of June. On the day, XPT/USD is moving 0.75% positive at 816.00.