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Little Changed In Asia; Spinning Wheels Around $1,700/oz

GOLD

Gold sits ~$2/oz weaker to print ~$1,707/oz at typing, operating a shade above Monday’s session lows after briefly showing below those levels earlier. The precious metal has established a tight $5/oz channel across Asia-Pac dealing thus far, struggling for direction amidst a limited uptick in the USD (DXY), with little reaction observed on news of China reporting 699 fresh COVID infections for Monday (highest since May 22).

  • To recap, gold was little changed on Monday, closing within ~$10 of the $1,700/oz handle for a third consecutive day as debate re: the aggressiveness of Fed tightening vs. economic slowdowns (particularly in the U.S. and Europe) remains in focus. A continued pullback in the DXY from last Thursday’s cycle highs has also likely lent some support to the precious metal, helping it tread water above $1,700/oz in recent sessions.
  • July FOMC dated OIS have drifted lower from last week’s extremes, and now price in around ~80bp of tightening for that meeting, pointing to ~20% odds of a 100bp rate hike (vs. ~93bp observed last Thursday).
  • From a technical perspective, gold remains in a downtrend, with our technical analyst flagging that moving average studies are pointing to bearish conditions. 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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