Gold bulls set targets on a run to YTD highs up at $1,326/oz

• Gold prices ended the week on a bullish note, lapping up the pessimism over the dollar. 
• Fed rate hikes for 2019 taken off the table by futures markets, gold a more favourable safe haven. 

Gold prices ended higher on Friday, hitting a two-week peak up at $1,322.56/oz spot. The safe haven metal moved up from a low of $1302.33/oz spot with a daily ATR of $10.26c. Bulls are taking their cues from the sentiment surrounding the Federal Reserve which sent the greenback a touch lower, despite a weaker CNH as the US and China trade talks drag on with no firm conclusions.  The WSJ was reporting that sharp divisions remain between the two sides, although there were conflicting headlines that a Chinese official said that the talks had reached consensus in principle with the US on the main topics which renewed market optimism with risk assets ending the week on a positive note. 

Futures price in a Dec rate cut by 10% 

However, there is a growing sentiment that the Fed will not be in a position to hike in 2019. Lats Friday, the futures markets were assigning a 10% chance to a December cut. SF Fed’s Daly hit the wires on Friday and explained to the WSJ that if the economy evolves as she expects, with 2% GDP growth and 1.9% inflation, then the case for another rate rise “isn’t there.” Despite that, due to the stock market rally, the US 10yr treasury yield climbed 1bp to 2.66%, while 2yr yields rose from 2.49% to 2.51%. The DXY bled out from a high of 97.37 to a low of 96.83 and closed Friday in North American trade at 96.92.

Gold levels

The indicators are leaning bullish, although a 50% mean reversion of the move will take the yellow metal back to 1316 and bears can target 1309 prior pivot point.  However, when full markets resume on Tuesday, gold bulls could well take the lead still so long as the price remains above the 76.4% Fibo retracement line of 31st Jan peak to recent swing lows; This level also comes with a confluence of R2  charts around the close for the day at 1321. Bulls are en-route to the fractal swing highs ahead of YTD highs up at 1326.