Gold Holding Important Support Ahead of Holiday Weekend

Gold edged modestly lower in early trading, weighed by an upward revision to Q1 GDP and a firmer dollar. The recent rise in Fed rate hike expectations continues to be a limiting factor on the upside. Q1 GDP was revised up to +0.8%, below expectations of +0.9%, versus +0.5% in the preliminary report. That's still very soft growth in the quarter immediately following the Fed's first rate hike in nearly a decade. While expectations for Q2 are better (+2.0% to +2.9%), it is reasonable to believe that the stronger forecasts may be largely attributable to the earlier belief that the Fed wasn't going to hike again until late in the year. If the Fed moves earlier — in June or July for example — we may well see growth deteriorate again later in the year. So another rate hike may simply be an exercise to get a little more clearance above the zero-bound so that the Fed has some room to ease (without going negative) when the next recession hits. Be assured there is another recession out there and it's past due. The periods of recovery between recessions have been as long as 120-months, and as short as 12-months. The current recovery happens to be the weakest post-WWII recovery ever. The average period of recovery is just over 59-months. It has been 7-years (84-months) since the Great Recession "officially" ended in June 2009. The Fed is playing a dangerous game in attempting to refill its toolbox at this juncture. They risk tipping the economy into the very recession they so desperately hope to avoid. For now gold has had a very reasonable correction. We're watching good chart/Fibonacci support at 1207.47/1205.32 ahead of the long holiday weekend. This area marks the corrective low from 28-Mar and the 38.2% retracement level of the entire rally from 1046.00 to 1303.80. The overbought condition has been relieved, so this may prove to be a good buying opportunity. Next week, focus will be on the May jobs report, which comes out Friday, 03-Jun. Median expectations for nonfarm payrolls is +160k. That's the same disappointing number that came out a month ago, which had everyone convinced that the Fed would NOT be raising rates any time soon. Kinda makes you wonder what might be going
source : www.usagold.com