It is encouraging that the bulls continue to react well in buying gold into weakness. It still feels like a difficult run higher, with subdued moves on bond yields hampering breakout potential. However, we continue to back moves to further multi-year highs. Our conviction for this strategy remains strong whilst trading above the breakout support around $1764.
This morning we see that gold is slipping slightly. This is a performance that is being reflected across major currencies, so gold is not alone there, as the dollar has picked up today. However, the relative chart below shows that over the past two weeks, gold is still a strong performer.
Aside from a little dollar strength related slip this morning, gold is still holding on strongly to its breakout above $1764. We still see any dollar strength as being near term in nature in the coming months as we anticipate the dollar will underperform in Q3. The rising infection rates in the US will weigh on the economic recovery, whilst the Presidential election with political uncertainty also set to weigh. This should help gold in the coming months and is why we see near term weakness on gold as a chance to buy.