Zaner Spot Gold Report
Spot gold is once again probing above the $1300 level. The yellow metal is being underpinned by a softer dollar along with simmering trade, political and geopolitical tensions.
Today's gains put gold above its 20-day moving average, which has fallen below $1300. However, the 200-day MA around 1308.00 is still seen as the important level to watch. A close above 1308.00 would shift focus to 1324.00/1325.84, where the 100-day MA corresponds closely with the 11-May high.
On the downside, the intraday low at 1293.69 protects more important support at 1289.71/31. Below that, the 1282.01 low from 21-May is in play.
Silver has jumped more than 50￠ since Monday’s low, reaching new 4-week highs this morning. The high from 07-May at 16.83 is back within striking distance. A breach of this level would highlight the 17.34 high from 19-Apr; the last significant barrier ahead of the 17.70 range high.
There has been some talk of exempting Canada from steel and aluminum tariffs, resulting in some “easing trade tensions” headlines. However, the EU is reportedly moving ahead with retaliatory tariffs on U.S. goods. The targeted products span “everything from peanut butter, to pleasure boats and motorbikes,” according to the FT.
Trade will likely be high on the agenda when the G7 meets in Canada at the end of the week. Whether the leaders of the seven largest industrial nations can walk back from the brink of a full-blown trade war remains to be seen.
Markets are also very much focused on next week’s FOMC meeting. A 25 bps rate hike is widely anticipated, but investors will be watching the economic projections and guidance in hopes of discerning the Fed’s intentions for the remainder of the year.
Gold has tended to rally in the wake of rate hikes during this tightening cycle. That may not be the case this time around if the Fed gives a strong indication that there will be four rate hikes this year.
While that is possible in light of recent strong economic data, I suspect for this meeting the Fed will continue to play their cards close to the vest. With reiteration of the ‘slow and steady normalization’ mantra, god could indeed get a boost.
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