Gold fails to hold its July high
Even though rates fell another 3 basis points today, the $1834 resistance level and some mild US dollar purchasing signaled difficulties for gold today.
Technically, that’s a basic setup, but as long as last week’s low of $1790 holds, it’s not necessarily bearish.
On the fundamental side, Powell’s statements this week provided some reassurance to the market that the Fed is not in a rush to raise interest rates. This prompted two days of gold buying, but given that it’s the end of the month and the market tone is more cautious, we’re seeing some caution.
Something has to happen at some point to capture the interest of gold bulls, and it’s difficult to discover right now. Best guess is that inflation will begin to fall. According to today’s PCE report, it is flattening out, and expecting it to fall in the next months. There’s even a case to be made that inflation will be significantly undershot a year from now, but that’s a long time to wait.