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USD strength weighs on Gold

Market Analysis


U.S. durable goods orders bounced 1.7% in August, a little better than expected, after falling 6.8% in July. Transportation orders rose 4.9%, recouping some of the 19.6% dive (revised from -19.0%). Excluding transportation, orders were up 0.2% following the prior 0.8% gain (revised from 0.5%). Nondefense capital goods orders excluding aircraft improved 0.9% after the prior 1.1% increase, and has gained in six of the last eight months. Shipments rose 0.3% after the 0.1% July gain (revised from 0.4%). Nondefense capital goods shipments ex-aircraft rose 0.7%, a 7th consecutive monthly increase. Inventories rose 0.3%. The inventory-shipment ratio was steady at 1.69.U.S. equities are clawing higher as tax cut reforms are expected to be revealed today by the Trump team. With Durable goods orders rebounded 1.7% in August, and another heavy dose of Fedspeak on tap as well, the dollar ticked slightly higher following the outcome, taking USDJPY to new trend highs of 113.08, and EURUSD down a few points to 1.1732.

Futures on the other side, such as gold, slipped to one-month lows of $1,285.63, with weakness coming on the back of Fed chief Yellen’s hawkish tone in Tuesday’s speech, where a December rate hike remains in play. Resulting dollar strength has weighed on the contract as well. Therefore the break of month’s lower fractal and also the break of  month’s lower value  at 1288.00, triggered our intraday SHORT position at 1284.44, near term Hourly Target 1 at 1281.00 and 4-hour Target 2 at the 1277.50. Targets have been set based on ATR in an hourly and 4-hour time-frames respectively.

Support for H1 was set at 1289.50 based on the down trendline set since yesterday’s peak. Support for Target 2 was set at 1296.00 according to ATR (14). The RSI is at 25-30 in both time-frames, while the XAUUSD formed bearish candles the last 2 days, while is also down for 3 consecutive weeks after 135751  peak on September 8.


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Andria Pichidi

Market Analyst


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