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Gold bulls should use caution at current price

Gold surged to an early evening high of 1613.3, the highest level since March 2013 after news broke that Iran was firing ballistic missiles at two U.S-Iraqi airbases. Fear was quickly exacerbated before it was reported that Iraq was given notice.

The good news came this morning when U.S officials confirmed that no casualties. Last night’s tweets by both President Trump and Iran’s Foreign Minister also calmed fears (see S&P section).

Gold now finds itself at unchanged, seeing a further wave of selling after stronger than expected ADP data. The December read topped expectations at 202k versus 160k expected and November was revised to nearly double at 124k versus 67k. This gives a glimpse, setting the table for Friday’s Nonfarm Payroll. There is a 10-year Note auction at noon CT.

Technicals: We remain Bullish Gold but began Neutralizing our Bias just slightly after to start the week as we feel Gold has reached a near-term overextension. However, given the geopolitical situation there are very few out there willing to take a short-risk position which ultimately increases volatility, as we have seen. Price action traded out above major three-star resistance at 1588.2-1595.7 last night but as of now is not holding that level and a failure to close above here would continue to encourage a consolidation pattern that can test as low as 1538.3, although we see strong major three-star support at 1549.9-1552.4.

The metal closed out above the 1566.2-1571.7 Pivot of previous highs which continues to favor the bulls; make no mistake, the tape is healthy, we are just cautious – it is smart to capitalize and take a more cautious approach when others are greedy.

Courtesy - Kitco



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