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Gold Closes Higher but Lags Behind Other Precious Metals

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Gold had a respectable gain today, however compared to the other metals in the precious metals group had the smallest percentage gain on the day. As of 4:40 PM EDT gold futures basis the most active August contract is currently trading at $1416, which is a net gain of $3.80 on the day.

In terms of percentages gold gained 0.28% on the day. This was much lower than the other precious metals with platinum leading the way. Platinum futures gained $12.20 on the day currently fixed at $846.80, which is a 1.46% gain. In second place comes palladium futures which gained 1.3%, and after factoring in today’s $20 rise is currently fixed at $1562.50. Silver futures also had an extremely robust gain of +1.14%, and are currently fixed at $15.41 after factoring in today’s gain of $0.17.

The fundamentals currently influencing gold prices remain solidly bullish. The two primary factors are the extremely dovish monetary policy recently adopted by the Federal Reserve and other global Central Banks, and the unresolved trade war between the United States and China.

An accommodative monetary policy is a strong and bearish influence on the U.S. dollar. Since gold is paired against the U.S. dollar, a weaker dollar results in higher gold prices. Although the dollar index was higher today by +0.14%, it was weaker last week in response to a looser monetary policy.

The current trade war is absolutely having an impact on the global economy. Recent data clearly illustrates a contraction in global economic growth which is fueling the upcoming actions of global Central Banks as well as the Federal Reserve. It is these factors that will continue to be highly supportive of gold pricing.

Our technical studies indicate that the first level of resistance in gold futures can be found at $1424. This is based upon the upper level resistance trendline. Major resistance is currently pegged at $1442 which is the highest trading point gold has achieved this year. There is solid support on a technical basis for gold at $1402 per ounce. This is based upon the most recent low which occurred on July 11th when gold traded to that price point.

Lastly, we have certainly seen gold consolidate which is evident on a daily chart clearly showing a series of higher lows, and lower highs. This consolidation has created a flag formation commonly referred to as a compression triangle. As the range compresses it is believed that energy builds, and when it breaks it releases that stored up energy. Although a compression triangle can break to the upside or downside, it is more likely that it will break to be prevalent trend direction which in gold is to the upside.

Wishing you, as always, good trading,

Gary S. Wagner - Executive Producer