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  • Gold prices have defined a wider range this month.
  • Gold’s shine has primarily been driven by a sharp drop in yields.

Gold prices were ranging between $1410.36 and $1421.67 on Thursday throughout the European and lack of a US session. The yellow metals moved over to the early Asian closing session at 41415, -0.28% on the day. This followed Wednesday’s futures settlement of $1,420.90 which was the highest finish for a most-active contract since May 2013.  

Markets are quiet following the 4th July holidays in the U.S. but the price from here will depend on the Nonfarm Payrolls report on Friday and any major swings one way or the other, including in any revisions that will likely sway the Federal Reserve will either hold, cut by 25bp, as the markets have priced, or be forced to cut by 50bps if the data is significantly bad.

“Gold’s shine has primarily been driven by a sharp drop in yields as expectations for an imminent Fed cut saw investors fret over the possibility that rates may be on a one-way train to zero, along with increased portfolio and central bank demand. But, HIBOR sitting at highs not seen since 2008 could also signal a temporary lack of liquidity which could be adding a boost to gold demand,” analysts at TD Securities argued.  

Gold levels

The 1430s were a prior resistance and the downside can target the 13 July 16 highs around the 38.2% retracement need to give. This is located at 1375. Indeed, prices have defined a wider range this month, back to test that of late June’s. However, below there, the  20-D moving average and then the 50% retracement of the April swing lows to late June swing highs around 1350. In the near term, 1396 where the 50 and 20-hourly moving averages meet could be a supporting area.