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GOLD

Gold sits ~$6/oz firmer to print $1,714/oz, operating a little shy of Friday’s best levels at typing. The precious metal has caught a bid as China reported >500 fresh COVID cases for another day while the USD has weakened, with the DXY continuing to back away from recent cycle highs as participants in Asia react to previously-flagged Fedspeak (with focus re: possibility of a 100bp rate hike in Aug), as well as softening long-term inflation expectations from Friday’s UoM survey.

  • To recap, gold closed little changed on Friday after repeated tests of the $1,700/oz handle, staying clear of Thursday’s 11-month lows ($1,697.7/oz). Bullion recorded a fifth straight week of losses (~$170/oz in all) amidst well-documented Dollar strength, with rate hike expectations for the Fed’s Aug FOMC ticking higher across the week (~74bp to ~80bp, referencing FOMC dated OIS).
  • The European Commission has formally proposed a ban on Russian imports of gold (following the G7 announcement in June), with RTRS sources suggesting possible bans on imports through third countries. As mentioned previously, the measure is expected to have limited impact on the space, given prevailing EU sanctions since Mar ‘22.
  • From a technical perspective, gold remains in a downtrend. Initial support is located at $1,690.6/oz (Aug 9 ‘21 low), while resistance is situated at $1,745.4/oz (Jul 13 high).

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