Spot gold fell to a new low for the week in overseas trading, but has since rebounded into the range. This leaves the yellow metal consolidative as it continues to get its directional queues from the dollar.
Even intensified saber rattling by the U.S. and Iran failed to garner any safe-haven interest in gold. Neither did the G20 communiqué, which warned that “short- and medium-term risks to growth have increased, including heightened trade and geopolitical tensions.”
We seem to be well and truly in the midst of the summer doldrums. The month of July has historically been a pretty good time to buy gold ahead of seasonal appreciation into the fall months.
When the doldrums end, and they will end, you can expect gold to recover a significant percentage of the losses seen since April. If the growth risks mentioned by the G20 come to fruition, they could provide an additional tailwind for gold as rate hike expectations evaporate and the dollar reverses course.
At this point, gold is holding above key support marked by last July’s low at 1204.72. Last week’s low at 1211.52 provides a solid intervening barrier and this area is further bolstered by the midpoint of the broader 1046.18/1375.17 range, which comes in at 1210.67.
Further tests of the downside must be considered as long as the 9-day moving average (1232.21 today) continues to cap gains on a closing basis. More substantial resistance is marked by the 20-day MA at 1243.36 and minor chart resistance at 1248.13.
Silver has moved more convincingly above the 15.50 to pressure last Thursday’s high at 15.57. The 9-day MA comes in slightly higher at 15.59 today. A close above this level would ease short-term pressure on the downside, but a close above the 20-day MA at 15.82 is still needed to start believing a bottom may be forming in front of last July’s low at 14.16.
Platinum is modestly higher on the day, but recent 10-year lows below $800 and yesterday’s sixth consecutive lower close keeps focus squarely on the downside. The present oversold condition warrants some short-term corrective action, but upticks will likely be viewed as selling opportunities. Initial resistance is marked by Friday’s high at 858.49 and is bolstered by the 9-day MA at 861.99.
Palladium has moved convincingly above its 9-day MA and seems poised to notch its third consecutive higher close. Nonetheless, last week’s definitive violation of key support at 896.50 set new 12-month lows and shifted focus to the 836.03/827.05 support zone. Former support at 930.25/931.41 now offers resistance, just ahead of the 20-day MA at 933.10.
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