- Gold bulls taking back the control, with price making a higher low.
- On the upside, 1410 was cleared by the close and bulls can look ahead to 1440.
Gold prices have ended the Wall Sreet session as stocks close at 1414, +071% higher between $1,403 and $1,417oz. Futures also finished higher on Friday which has left a bullish week candlestick following a weaker Dollar on the back of Federal Reserve Chairman Jerome Powell's two-day testimony which rubber-stamped a rate cut from the Fed' this month. Gold for August delivery on Comex added $5.50, or 0.4%, to settle at $1,412.20 an ounce making for a weekly rise of 0.9%.
The major question that remains to be answered in the coming months surrounds the trajectory for growth in the months immediately following a Fed cut, argues analysts at TD Securities:
"Should growth dynamics pivot in the aftermath of this year's expected cuts, which would lead market historians to record the Fed's actions as insurance cuts, gold's performance would likely sour as the need for further cuts would abate. However, should growth remain on a contractionary trajectory and prompt the Fed to continue lowering rates in a bid to stimulate the economy, gold would likely extend its gains further."
From a technical perspective, the price of the yellow metals has broken up out of the recent consolidation, extending from the recent lows of 1381 and basing now in the 1400s, although remains below the 1439 prior highs. There are a series of bearish pin bars on the daily charts which are keeping a lid on bull's appetite. The 20-day moving average was a support level but on a break lower, bears would target a 50% retracement of the April swing lows to late June swing highs around 1352. On the upside, 1410 was cleared by the close and bulls can look ahead to the 1440 key resistance which makes way for a continuation to the May 2012 lows at 1527.