Gold Traders' Report - April 11, 2018

Jim Pogoda, Trader, Gold Bullion International 
APR 11, 2018

Gold traded higher overnight in a range of $1339.50 - $1352.40.

It triggered some buy stops over yesterday’s $1343 high along with the double top at $1347-48 (3/28 and 4/2 highs) and the $1350 options strike to reach its high, where it was capped in front of resistance at $1354 (down trendline from 1/25/18 $1366 high).

Gold was supported by weakness in the US dollar (DX from 89.64 – 89.45, fresh 2-week low), which was pressured by strength in the yen (107.25 – 106.70, stronger than expected Japanese Machine Orders, PPI) and the euro ($1.2350 - $1.2395, Draghi says confident inflation will rise to ECB’s goal).

Mostly weaker global equities were also gold supportive with the NIKKEI off 0.5%, the SCI rose 0.6%, European shares were off 0.1% - 0.5%, and S&P futures were off 1.1%.

Some bellicose tweets by Trump (after Russia’s ambassador to Lebanon said Russia would shoot down US missiles headed to Syria) also rattled markets and were gold supportive: 

Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and “smart!” You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!

6:57 AM - Apr 11, 2018

 Our relationship with Russia is worse now than it has ever been, and that includes the Cold War. There is no reason for this. Russia needs us to help with their economy, something that would be very easy to do, and we need all nations to work together. Stop the arms race?

7:37 AM - Apr 11, 2018

At 8:30 AM, a lower than expected reading on US CPI took the US 10-year yield down to 2.755%, and pushed DX down to 89.39.  This boosted gold through its down trendline at $1354 to reach $1355.50, but resistance at the double top at $1356 – 57 (3/26 and 3/27 highs) held.

After a stronger open, US stocks turned down by late morning (S&P -15 to 2641, telecom, financials, and materials lead decliners) on news that the Saudi’s intercepted a missile over Riyadh.

Oil rallied strongly on the news (WTI to $67.45 – 3 ½-year high) shrugging off a surprise build in US inventories. The 10-year yield dipped back to 2.766% after a modest bounce to 2.784%.

The DX probed lower (DX to 89.35), and drove gold through the $1356-57 double top and the 2/16 high at $1362 to reach $1365.25 (11 week high) – where resistance at $1365 held (down trendline from 7/6/16 $1375 high, $1365-67 – 5 tops 1/25, 8/2/16, 8/3/16, 8/4/16, and 8/5/16 highs).  A fair amount of short covering along with some new momentum playing longs were seen.

Into the afternoon, equities turned positive (S&P +6 to 2662, tech and energy lead gainers), and the 10-year yield climbed to 2.79%.

The beleaguered dollar clawed back to 89.52, and gold sold off.  Heavy fund selling was seen (profit taking and some new shorts) that drove the yellow metal back to $1354, where the old resistance trendline became support. 

Open interest was up 5.7k contracts, reflecting a net of new longs from yesterday’s advance. Volume was a little higher with 296k contracts trading. 

 All markets will continue to focus on the volatility in the equity and bond markets, geopolitical events, developments with the Trump Administration, oil prices, and will turn to this afternoon’s release of the FOMC minutes from 3/21 reports tomorrow on Eurozone Industrial Production, ECB’s Account of March Meeting, US Import Prices, Export Prices, Jobless Claims, and comments from the BOJ’s Kuroda, the ECB’s Coeure, and the Fed’s Kashkari for near-term direction.

In the news:

Resistance levels: 

$1356 - 57 – double top, 3/26 and 3/27 highs

$1362 – 2/16 high

$1365 – down trendline from 7/6/16 $1375 high

$1365-67 – 5 tops 1/25, 8/2/16, 8/3/16, 8/4/16, and 8/5/16 highs

$1375 – 7/6/16 high   

$1388-89 – double top 3/16/14, 3/17/14 highs

Support levels:

$1354 – down trendline from 1/25/18 $1366 high

$1350 – options

$1347-48 – double top - 3/28 and 4/2 highs

$1345 – down trendline from 8/2013 weekly chart

$1343 – 4/10 high

$1335 – 50% retracement of down move from 1/25 $1366 high to 3/1 $1303 low

$1335 – double top highs 4/5 and 4/6

$1332 – 20-day moving average

$1332 – 50% retracement of up move from the 3/20 $1307 low to the 3/27 $1357 top.

$1331 – 4/10 low

$1331 – 50 day moving average

$1331 – 40 day moving average

$1322 – up trend line from 12/12 $1236 low

$1321 – double bottom, 3/29 and 4/6 lows

$1313-15 – quadruple bottom, lows 3/2, 3/9, 3/12, 3/13

$1314 – 100-day moving average

$1307-10 – quadruple bottom – 3/16, 3/19, 3/20, and 3/21 lows

$1303 – 3/1 low

$1302 – 1/1 low

$1301 – 50% retracement of up move from 12/12/17 $1236 low to 1/25/18 $1366 high

$1300 – psychological level, options

$1298– 200-day moving average

$1294 – 12/29 low

$1287 – 12/28 low

$1281 – 12/27 low