Today’s Spotlight Market
Gold futures have lost some of their luster over the past several weeks, as some traders have set aside their fears and taken on more risk. The stronger US Dollar has driven commodity prices broadly lower, lessening Gold?s appeal. Oil prices are more than $5 off recent highs, which likely has led to some traders limiting their commodity exposure. Gold traders also are concerned that tomorrow?s FOMC policy decision could include a statement with a slightly hawkish tilt.
Fundamentals
Traders appear to have put aside concerns over the Brexit for the time being, but the full effects of the UK leaving are not yet known. Some traders believe that the recent decline in the price of Gold may have created a buying opportunity for traders. The uncertainty over the upcoming US Presidential election and the Brexit fallout, along with the rocky geopolitical climate, seem to favor the yellow metal. On the other hand, some traders believe that the recent decline in Gold was largely due to the metal being overinflated and overbought due to the lead-up to the Brexit. The Brexit, when all is said and done, may actually be a negative for the price of Gold due to the expected negative effect on global economic growth. The International Monetary Fund (IMF) trimmed its global growth forecast for 2016 from 3.2% down to 3.1%. Lower growth means lower inflation expectations, which can be seen as bearish for Gold.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the August Gold contract reversing course in recent sessions. Prices closed below the 20-day moving average, which suggests that a near-term high may be in place. The next area of support comes in around the 1300 level. If prices are able to hold above 1300, Gold may see a neutral to bullish bias.
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