Gold Traders’ Report - April 10, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International 
APR 10, 2019

Gold was quietly steady overnight, trading either side of unchanged in a narrow range of $1301.20 - $1305.30.  It was stable along with other markets ahead of key data today on the ECB statement / Draghi Press Conference, US CPI, and FOMC minutes.  The US dollar was slightly weaker and gold supportive with the DX sliding from 97.08 – 96.89.  It was pressured by modest gains the pound ($1.3042 - $1.3101, stronger UK Industrial Production, May’s quest for short delay from the EU likely to be rebuffed in favor of a longer, flexible delay, reducing chances of no-deal Brexit), and the euro ($1.1254 - $1.1280).  Global equities were mostly firmer and a headwind for gold with the NIKKEI off 0.5%, the SCI was up 0.1%, European markets were up from 0.1% to 0.4%, and S&P futures were +0.2%.  Equities were lifted by higher oil prices (WTI to $64.52, API reported much larger than expected draw in US gasoline stocks, OPEC production cut to 30M bpd a 4-year low). 

 At 8:30 AM, the US CPI Report was a bit mixed.  While the headline number was up 0.4% as expected, the Core was slightly lower than anticipated, both MoM  (0.1% vs. exp. 0.2%) and YoY (2.0% vs. exp. 2.1%), but the YOY overall number was a tad stronger (1.9% vs. exp. 1.8%).  As a result, the DX (96.86 – 97.04) and gold gyrated $1301 - $1304.50 wildly, but remained within their overnight ranges.

 Shortly afterward, dovish comments from the ECB’s Draghi (risks still tilted to the downside, incoming data continue to be weak, inflation likely to decline over coming months, ready to adjust all instruments) knocked the euro down to $1.1229, and lifted the DX to 97.23.  Gold was fairly resilient, however, and its decline was limited to $1302.  The yellow metal then turned and rallied quickly to $1306.70 (capped near yesterday’s high) when global bond yields turned significantly south off of Draghi’s downbeat assessment (German Bund 0.001% to -0.035%, US 10-year from 2.502% to 2.476%, UK Gilt from 1.128% to 1.094%). 

 US stocks opened slightly higher (S&P +8 to 2886) with the Utilities and Real Estate sectors leading gainers while the US 10-year yield continued to soften (2.468%).  The DX was caught in the cross currents and was tugged down to 97.10, lifting gold to $1307 – a fresh 2-week high.  

 US stocks pared some gains into the late morning (S&P +2 to 2879), hurt by a dip in oil (WTI down to $64.05, EIA reports larger than expected build in US Oil Inventories).  The US 10-year bond yield ticked up to 2.477%, but the DX pulled back to 96.95 - pressured by a bounce in the euro ($1.1265) and the pound ($1.3095).  Gold pushed higher in response to reach $1309. 

 In the afternoon, US stocks edged slightly higher (S&P +7 to 2885), helped by a reversal in oil (WTI to $64.67, focus turned to larger than expected draw in US gasoline stocks).  The 10-year yield hovered around 2.475%, but the DX softened further.  The greenback continued to erode as the euro ($1.1278, nearly erases losses from Draghi dovishness) and pound ($1.3115) advanced.  Gold probed higher, reaching $1310.70 (helped by some bets on a dovish view of the FOMC minutes) before becoming steady ahead of the FOMC minutes. 

 Open interest was up 7.9k contracts, showing a decent chunk of new longs from yesterday’s $6 advance.  Volume was lower with 209k contracts trading. 

 All markets will continue to focus on geopolitical events (especially Brexit news), developments with the Trump Administration (especially on US-China trade, potential legal issues), Q1 corporate earnings, oil prices, and will turn to this afternoon’s minutes from the March FOMC meeting followed by reports tomorrow on China’s PPI, CPI and Foreign Direct Investment, Germany’s CPI, US PPI, Jobless Claims and comments from the Fed’s Clarida, Bullard, Quarles, Kashkari, and Bowman for near term direction.  

 In the news:

Goldman lowers chance of US recession:   https://www.investing.com/news/stock-market-news/goldman-lowers-chance-of-us-recession-to-just-above-10-percent-1832130

 Venezuela removes 8 tonnes of gold from central bank:   https://in.reuters.com/article/venezuela-gold/exclusive-venezuela-removes-8-tonnes-of-gold-from-central-bank-sources-idINKCN1RL27Y?rpc=401&

 Gold and Basel III:   https://www.zerohedge.com/news/2019-04-09/gold-basel-3-revolution-once-again-no-one-noticed

YTD Performance


12/31/2018

4/10/2019

Change
% Change
Gold


1282.5

1309

26.5

2.066%

DX


96.06

96.88

0.82

0.854%

S&P


2505

2884

379

15.130%

JYN


109.63

110.88

1.25

1.140%

Euro


1.1466

1.1274

-0.0192

-1.675%

US 10-year bond yield


2.686

2.475

-0.211

-7.856%

Oil (WTI)


45.45

64.63

19.18

42.200%

 

Resistance levels: 

$1312 – 3/28 high

$1311 – 4/10 high

$1314 – 50% retracement of down move from 2/20 $1347 high to 3/7 $1281 low

$1314 – down trendline from 2/20 $1347 high

$1319 - 3/27  high

$1322  -3/26 high

$1325 – options

$1325 – 3/25 high

$1327 – 2/28 high

$1330 – double top – 2/27 and 2/26 highs

$1333 –double top 2/22 and 2/25 highs

$1342 – double top - 2/19 and 2/21 highs

*$1346-47 – double top 2/20 and  4/20/18 highs

$1353-56 – triple top – 4/12/18, 4/18/18 and 4/19/18 highs

*$1365-67– triple top – 8/2/16, 1/25/18 and 4/11/18 highs

*$1373-75 – double top – 7/6/16 and 7/11/16 highs

 Support levels:

$1308 – 50-day moving average

$1307 – 40-day moving average

$1306 – 4/9/high

$1303-05 – former breakout (6/15/18 top) and prior 5 bottom support (1/29, 2/7, 2/11, 2/13, and 2/14 lows)

$1302 – 20-day moving average

$1301 – 4/10 low

$1300 – 3/29 high

$1300 – psychological level, options

$1297 – 4/9 low

$1293-95 –quadruple top 4/2, 4/3, 4/4, and 4/5 high

$1292 – 4/8 low

$1287-89 – quadruple bottom 3/28, 3/29, 4/1 and 4/3 lows

*$1287– 100-day moving average

$1285 – triple bottom 3/8, 4/2, and 4/5 lows

$1281-84 – 5 bottom 3/4, 3/5, 3/6, 3/7, and 4/4 lows

*$1284 – up trendline from 12/28 $1274 low

*$1277-80 - 7 bottoms – 12/28, 1/4, 1/21, 1/22, 1/23, 1/24 and 1/25 lows

$1275 – options

$1274 – 12/28 low

$1265-67 – 12/25, 12/26 ,and 12/27  lows

$1259 – 12/24 low

$1254 – 12/21 low

$1250 – options

$1250 – 200-day moving average