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Thursday, March 30, 2023


Morning Gold Fix: July 28

Courtesy of Tyler Durden

Commentary courtesy of www.fmxconnect.com

Yesterday’s activity was a kick in the face to dip buyers like me. If you read yesterday’s post and just ignore the first line, I was spot on. But I ignored the signs and made an assumption that the pin risk was stronger than the bowling ball around Gold’s neck. Time to go back to just assessing events and risks and leave the prognostication to the tea leaf readers.  On that note, take a look at this technical report out yesterday from Citi on our embattled yellow metal. Full PDF here

Time to take a much more defensive stance on Gold

•While we remain constructive on Gold from a long-term perspective the shorter-term price action is now very disappointing with a severe correction lower looking a real danger.

•Equities are performing well with bullish weekly reversals on 4 major U.S. indices last week and break of supports on VIX yesterday.

•U.S. yields are finally rising with possible double bottom forming on U.S. 30 year yields at 4.12%. A break would suggest 4.40-4.50% again and drag 10 year yields through the pivotal 3.05-3.10% area. U.S. 2 year yields are also starting to rise and drag USDJPY higher with 89.00 mow looking on the cards here.

•European sovereign spreads are falling sharply; German 2 and 10 year yields are rising as the curve flattens.

•EURCHF is bouncing strongly

•Industrial commodities (Copper and Crude in particular) are outperforming Gold in recent days.

•It’s looking like a very pro-risk dynamic could be developing and as this has been happening Gold has not been able to follow through towards our $1,300 target

•The base of the 2 year channel around $1,176 is now under threat and a close below (Weekly) would suggest a danger of extended losses. Weekly divergence at the recent highs also supports this danger.

•A weekly close through the base of this channel could suggest extended losses towards $1,030-$1,045 again.

•Could it be that we are entering a multi-month pro-risk environment where people feel less need to hold Gold as a hedge as other assets look more attractive?

Gold monthly chart

Source: Aspen Graphics / Reuters 27 Jul’10

Elizabeth Thawne

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