The Bears Remain Stubborn, But The Pain Is Increasing
Gold continue to push higher with the $1,220 level in sight.On Friday we suggested that the bears were at risk and Powell's somewhat dovishstance created a small stampede through a tiny door.
With the December ratehike now in question and the September increase fully priced in, the dollar took it on the chin and the move grewin momentum as trade tensions began to soften. The announcement of theagreement between the U.S. and Mexico added to this psychology yesterday. We think the dollar reversal, although expectedfrom an overbought position, is premature and strength in the dollar may emergeafter Labor Day. Adeal with Mexico is one thing, but China is another story.
The momentum forgold remains higher, if we can hold the $1,212 level, on a close basis. Thetrade remains heavily short and a break above the $1,220 line may accelerateshort covering. Of the entire metals group,silver remains the best value for the bull camp.
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