Gold Liquidation Accelerates

London (July 18)   Gold touched the next major support line of $1,220 overnight. Weaker oil prices suggesting a softer inflation impact and a stronger dollar on yield differentials have both contributed to the selling pressure. Fed Chair Powell reinforced the Fed’s guidance of two additional rate hikes this year at yesterday’s congressional testimony, which provoked liquidation in the commodity space in general. We think the $1,220 level should create a pause in the selling, but the fundamentals remain bearish. A break here suggests a medium target of $1,187 and with options expiries this week, traders may also try and put pressure on the $1,200 strikes.

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