Gold softened overnight in a range of $1297.50 - $1303.20, tripping some sell stops under the $1300-$1303 former resistance level (7 tops 6/1, 6/5,6/6, 6/7, 6/8, 6/11, and 6/12 highs, $1300 – down trendline from 5/15 $1315 top, 50% retracement of up move from 12/12/17 $1236 low to 1/25/18 $1366 high, $1300 – psychological level, options).
It was pressured by a firmer dollar (DX to 95.14, fresh 7-month high), which was helped by weakness in the yen (110.45-110.90, BoJ had dovish assessment of inflation, no hurry to scale back stimulus), and continued weakness in the euro ($1.1543 – fresh 2-week low, ECB’s decision yesterday to keep rates low through next summer still resonating).
Mostly weaker global equities were gold supportive with the NIKKEI up 0.5%, the SCI was off 0.7%, European markets ranged from unch to -0.8%, and S&P futures were -0.5%.
An official statement from the Trump Administration announcing 25% tariffs on a list of $34B of Chinese goods and a statement from China threatening retaliation weighed on stocks, and helped take the US 10-year bond yield down to 2.19%, it but failed to stem gold’s decline.
Selling on the NY open knocked gold down to support at $1294 (up trendline from 12/15/16 $1123 low). This was followed quickly by a stronger than expected reading on the Empire State Manufacturing Index (25 vs. exp. 18.5) that brought the DX back up to 94.89, and broke gold’s support at $1294.
The yellow metal plunged through support at $1292-93 (double bottom – 6/12, and 6/13 lows) to reach $1288, where it found support at the double bottom low from 5/22-23. A fair amount of long liquidation was seen.
At 9:15 AM, worse than expected readings on US Industrial Production (-0.1% vs. exp. 0.2%)...