Calm Before The Storm For Gold?
Today’s Spotlight Market
Gold futures have moved very little over the past several sessions, forming a consolidation pattern on the daily chart. Economic conditions have triggered very little demand for the precious metal as a safe haven. Furthermore, recent comments from several Fed officials certainly point toward a rate hike in September, which may bolster the US Dollar. St. Louis Fed President James Bullard had indicated he was in favor of a rate increase in September. Yesterday, Atlanta Fed President Dennis Lockhart said it would take ?a significant deterioration in the economic picture? to dissuade him from voting for a September rate increase.
Fundamentals
There has been some speculation that the decline in Gold prices could attract some value buying in Gold. However, there has been very little evidence to support this is the case. Gold has simply fallen out of favor with investors for the time being. Investors are expecting today?s claims data to be near decades low levels, which will do little to help Gold?s cause. Deflationary pressure, rather than inflation, has been a major topic of concern for investors. Indian and Chinese consumers have shunned the metal as an investment. Hedge funds are short Gold in near-record numbers, which may not necessarily be a bad thing for the bull camp. An extremely large short position could signal the market being extremely oversold. However, traders may wish to take this with a grain of salt, given the weak fundamentals for the metal.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the August Gold contract continuing to consolidate below the 1100 level. Given the preceding down move, this suggests a downward bias on a potential breakout from the choppiness. The RSI indicator remains oversold, which could be supportive in the near-term.
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