Gold Traders' Report - April 18, 2018

Jim Pogoda, Trader, Gold Bullion International 
APR 18, 2018

Gold traded higher overnight in a range of $1342.35 - $1354, largely fading movement in the US dollar.

It dipped to its $1342.35 low during Asian hours, as the DX firmed to 89.69 from some weakness in the yen (107-107.38).

News that Secretary of State nominee Mike Pompeo had a secret meeting last week with North Korean leader Kim Jong Un also weighed on gold.

Later during European time, gold took out resistance at $1349 (yesterday’s high), $1350 (options), $1351 (4/16 high), $1352 (down trendline from 1/25  $1366 high), and $1353 (4/12 high) to reach $1354, as the DX pulled back to 89.48 from a bounce in the euro ($1.2345 - $1.2393).

Gains in global equities were a headwind for the yellow metal with the NIKKEI gaining 1.4%, the SCI rose 0.8%, Eurozone markets were flat to +0.8%, and S&P futures were up 0.2%.

Stronger oil prices (WTI $66.40 - $67.50) from a larger draw in gasoline stocks reported by the API aided the rise in stocks.

US stocks opened weaker (S&P -3 to 2703), which weighed further on the DX (89.44), and led to the US 10-year bond yield dipping to 2.832%.

Gold continued its rally, climbing to $1356 where resistance in front of the old double top held.  By late morning, however, US stocks turned higher, (S&P +11 to 2718), helped by a continued advance in oil (WTI to $68.40 – fresh 3-year high, EIA showed larger than expected draw in US crude stocks).

The 10-year yield rose to 2.862%, and the DX turned up to reach 89.64.  Gold backed off in response, but 3 successive dips below $1350 were bought by bargain hunters.

In the afternoon, US stocks pared some of their gains (S&P +5 to 2711), and the 10-year yield was steady around 2.86%.  The DX pulled back to the 89.55-60 level, and gold traded narrowly between $1350-$1352.

Open interest was up 1.1k contracts, showing a net of new longs from yesterday’s advance.  Volume was a bit higher than yesterday’s with 288k contracts trading.

All markets will continue to focus on the volatility in the equity and bond markets, geopolitical events, developments with the Trump Administration, corporate earnings, oil prices, and will turn to this afternoon’s Fed Beige Book followed by reports tomorrow on UK Retail Sales, US Jobless Claims, Philly Fed, Leading Index, and comments from the Fed’s Mester and Quarles for near-term guidance.

In the news:

Resistance levels: 

$1351 – 4/16 high

$1353 – 4/12 high

$1353 – down trendline from 1/25/18 $1366 high

$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 – 6 tops 4/11, 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:

$1350 – options

$1349 – 4/17 high

$1347 – 4/13 high

$1345 – down trendline from 8/2013 weekly chart

$1341 – 4/16 low

$1338 – 4/17 low

$1337 – 20-day moving average

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

$1334-35 double bottom – 4/12 and 4/13 lows

$1331 – 4/10 low

$1331 – 50 day moving average

$1331 – 40 day moving average

$1327 – up trend line from 12/12 $1236 low

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

$1317 – 100-day moving average

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

$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

$1300– 200-day moving average

$1294 – 12/29 low

$1287 – 12/28 low

$1281 – 12/27 low