Summary:

• Gold falls below 1236 to hit 1-year low
• US industrial production rises to 0.6% but prior revised lower
• Powell speech in focus

There’s been a potentially decisive break lower seen in Gold in the last hour with a better than expected US industrial production print seeing the market break below prior support at 1236. The precious metal has found some buyers stepping in around this level on a retest at the start of the month and a double bottom from the Dec 17 low looked like it was possibly forming. However, today’s break could be seen to negate this and should the move be further supported by a daily close below the level then a move to 1205 becomes more likely.       

 

 Gold has fallen over $100 in recent months and now trades at its lowest level since last July. Source: xStation

Looking more closely at the industrial production data, it could actually be described as more of a mixed bag with the beat on the headlines being offset to some extent. In m/m terms the reading for June came in at 0.6% , slightly above the 0.5% expected, but due to the prior being revised down to -0.5% (from -0..1% beforehand) it could be argued that this isn’t that positive at all. Also the capacity utilization rate of 78.0% was below the 78.3% expected.

 Industrial production picked up in the most recent release but a notable divergence is opening up with the ISM manufacturing print. Source: XTB Macrobond

Looking ahead, Fed chair Powell is expected to testify on the semiannual monetary policy report before the Senate Banking Committee at 3PM in what could be a key event for both Gold and the USD.