Gold rose sharply overnight in a range of $1255.50 - $1266, with some buy stops triggered over the $1259-61 – quadruple top (6/27, 7/4, 7/5, and 7/6 highs) to reach a two-week high.
The yellow metal was fueled by a weaker dollar, with the DX dropping from 94.02 to 93.71 to reach a one-month low.
The greenback was pressured by a rebound from recent weakness in the yuan (6.6112, Chinese foreign exchange reserves rose), strength in the euro ($1.1740 - $1.1790, stronger German Trade Balance and Eurozone Sentix Investor Confidence), and a firmer pound ($1.3285 - $1.3362, Brexit Minister Davis resigns, increasing likelihood of soft Brexit).
Healthy advances in global equities – despite the implementation of tariffs by the US and China on Friday - were a headwind for gold with the NIKKEI +1.2%, the SCI +2.5%, European shares were up from 0.2% to 0.6%, and S&P futures were +0.4%. Weaker oil prices (WTI down to $73.45) weighed on stocks.
At 9AM, dovish comments by the ECB’S Draghi softened the euro ($1.1765 - reiterated pledge to leave rates unchanged through the summer of 2019), helped lift the DX to 93.90, and pushed gold back to $1263.
At 10AM, the resignation of UK Foreign Secretary Johnson (again over May’s soft Brexit plan) crushed the pound ($1.3240), and further weakened the euro ($1.1755). The dollar gained, with the DX climbing back over 94 to reach 94.08.
Gold was knocked lower to $1260.50, also pressured by a rise in the US 10-year bond yield (2.862%) and a stronger opening and early gains in US stocks. The S&P was up +18 to 2778 by late morning, with industrials and financials leading gainers, and a rebound in oil (WTI to $74) aided the move.