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  • Gold continues lower within the golden death cross that formed by the close of play last week.
  • Gold lower on demand for equities, despite trade war tensions.  

Gold prices ended at their lowest level in more than six months on Tuesday while stock markets bounce nicely and the dollar carves out an impressive performance in the DXY, currently trading in the higher end of the 94.17 – 94.77 range today at 94.71. Spot gold is currently trading at $1,258.51 with a high of $1,267.84 and a low of $1254.72.  

Gold has been subject to first, an advance in the European bourses and then on Wall Street despite a fresh round of trade friction. Gold has otherwise been tethered to the ebbs and flows of the greenback while interest rate expectations in the US keep the dollar underpinned vs ever-changing sentiment in competitor economies as investors weigh up the prospects of a global trade war and the implications that has a worldwide recovery – subsequent to  American global economic dominance, the dollar comes up on top each time and remains in demand whenever we weigh up the competing arguments for sustained growth in global economies, a negative for gold despite the compelling argument for its safe-haven status in times of uncertainty. All in all, investors with idle capital are finding more value in picking bottoms in stocks than gold and margin calls are likely adding to the supply in gold as longs liquidate to meet margin calls in stocks.

US economic data

From the calendar today, the Richmond Fed posted a strong June result, rising to 20. “All three main components – shipments, new orders and employment – rose. Capital spending plans increased too as firms continued to struggle to find employees with the skills they need. A margin squeeze seems to be occurring with prices paid spiking to its highest level since November 2012. Some of this is being passed on with prices received increasing too. US consumer confidence eased slightly, weathering another rate hike, trade tensions and a wobbling equity market. The present situation confidence was relatively unchanged at 161.1 and expectations fell to 103.2,” noted analysts at ANZ.

Gold levels

The golden death cross formed by the close of play last week and this was for the first time since around November of 2016; The 50-D SMA moving average for gold prices, currently at $1,302.16, is falling below its longer-term 200-D SMA moving average at $1,304.80.  Meanwhile, the Supports for the pair align at $1254 (daily low), 1252.50 (Dec. 18 low) and $1243 (Dec. 8 low). On the flipside, resistances look to be $1,276 (Jun. 20 high) ahead of $1289 (21-D SMA) and $1300 (psychological level).