Spot gold continues to trade just above the critical $1200 level. A slightly positive tone is evident this morning, although price action remains confined to the previous day’s range thus far.
The yellow metal has gotten a bit of a boost after the dollar index was yet again unable to sustain gains above 95.50. That’s the fourth rejection from above 95.50 dating back to 21-Jun.
The dollar had been garnering safe-haven flows as trade tensions mounted, premised on the belief that as the biggest net importer in the world, the U.S. had the least to lose in a trade war. However, the Zaner Daily Metals Newsletter notes that Chinese state media outlets are now suggesting that China could “win a Trump trade war and perhaps sentiment toward the dollar has reversed course on that argument.”
A breach of minor support marked by Friday’s low at 94.98 would clear the way for challenges of the 9- and 20-day moving averages, which come in at 94.85 and 94.78 respectively. A close below the latter would shift attention to the trendline at 94.40.
Renewed weakness in the greenback would provide a bit of a tailwind for gold. The 9-day MA at 1217.19 marks the first resistance. A close above the 20-day MA (1225.88 today) is needed to lend some credence to the bottoming scenario.
The recent liquidation of spec longs and the record short position in gold may make it difficult to push below $1200. Signs that Indian jewelers are building inventory ahead of the festival season may be an early indication that the seasonal influence in gold is about to kick-in.
Conditions are ripe for a rebound, but as of yet, upticks in the yellow metal just haven’t been able to gain any traction. There may still have to be a run below $1200 to shake out any remaining weak longs.
Silver continues to consolidate above the 15.22/17 lows. While the 15.17 low has been in place since 19-Jul, the chart pattern that has emerged looks more like a continuation pattern than a bottom.
A rebound above 15.67 is needed to set a more positive tone, by confirming the small double bottom. Such a move would also put silver above the 20-day MA. At that point, we’d look for a return to the $16 area initially.
Platinum continues to trade in a choppy manner, straddling its 20-day moving average (827.63 today). With the 791.85 low well protected at this point, we’ll call the short-term tone neutral. Resistance at 844.13/845.27 must be cleared to set a more positive tone.
Palladium has rebounded modestly after failing to push back below $900 yesterday. Almost exactly 50% of the recent rally off the 870.00 low from 20-Jul has been retraced. Continue to watch the 20-day MA on a close basis for short-term directional queues.
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