Gold Traders' Report - April 19, 2018

Jim Pogoda, Trader, Gold Bullion International 
APR 19, 2018

Gold was a little choppy overnight in a range of $1345.70 - $1354.80.

It firmed during Asian and early European time to its $1345.70 high as the dollar softened (DX to 89.50) - hurt by some euro strength (euro from $1.2368 - $1.24).

Later on, gold was pressured to $1345.70 as the DX bounced back to 89.75, boosted by a weaker pound ($1.4219 - $1.4162 – miss on UK Retail Sales), and a pullback in the euro ($1.2355).

Ahead of the NY open, however, the DX slipped back to 89.55 as the pound rallied back sharply ($1.4246), and the euro recovered ($1.2385).

Rising global bond yields were a headwind for gold, with the JGB (0.34% - 0.43%), German Bund (0.532% - 0.584%), UK Gilts (1.43% - 1.49493%), and US 10-year (2.862% - 2.906%), as were mostly firmer global stocks.

The NIKKEI was up 0.15%, the SCI +0.8%, European shares were unch to +0.2%, but S&P futures were off 0.1%.

Higher oil prices (WTI to $69.56 – fresh 3-year high, Saudi comments that they are looking for crude to rise to $80 or $100 ahead of OPEC meeting tomorrow, growing expectations that the US will re-introduce sanctions against Iran) were supportive of equities.

At 8:30 AM, a slightly worse than expected reading on US Jobless Claims (233k vs. exp. 230k) was largely offset by a better than predicted report on the Philly Fed (23.2 vs. exp. 21).

Ahead of the NYSE open, a disappointing forecast by Taiwan Semiconductor weighed on the tech sector, and some dour comments from the IMF’s Lagarde (sees mountain of debt globally, US debt will haunt it, trade spat may dent business confidence) pressed equities lower through the open (S&P -16 to 2692, Apple, Nvidia, Micron, Advanced Micro and the tech sector leads decliners).

The US 10-year yield continued to rise, though (2.91%), and the dollar – caught in the cross currents – hovered around 89.55.  Gold was likewise steady, and traded narrowly between $1346-48.

Later in the morning, the 10-year yield continued to climb (2.934%), as did the yields of the German Bund (0.604%) and the UK Gilt (1.524%).

US equities slid further (S&P -23 to 2685, return of higher rate fears spook stocks), but the dollar was tugged up by the higher bond.

The DX took out its highs from yesterday and Monday to reach Friday’s high of 89.89. Gold slid in response, and breached support at the overnight low at $1345 and yesterday’s $1342 bottom to reach $1340.80.

Into the afternoon, US equities continued to slide (S&P -27 to 2682), but the 10-year yield backed off to 2.91%. The DX slipped to 89.77, and gold bounced to $1346.50.

Later in the afternoon, US stocks pared some losses (S&P finished -15 to 2693), while the 10-year yield remained steady around 2.91%-2.92%.

The dollar was firm between 89.84 – 89.96, and gold ticked down to trade narrowly between $1344-$1346. The yellow metal was $1346 bid at 4PM with a loss of $5.

Open interest was up 7.7k contracts, showing a fair amount of new longs from yesterday’s advance. Volume was higher with 309k 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 reports tomorrow on Japan’s CPI, Tertiary Industry Index, Germany’s PPI, US Baker-Hughes Rig Count, Commitment of Traders Report, and comments from the Fed’s Evans for near-term guidance.

In the news: 

 

Resistance levels: 

$1350 – options

$1352 – down trendline from 1/25/18 $1366 high

$1355 – 4/19 high

$1355 - 57 – quadruple top, 3/26, 3/27, 4/18, and 4/19 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:

$1345 – down trendline from 8/2013 weekly chart

$1341 – 4/19 low

$1340 – 20-day moving average

$1338 – 4/17 low

$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

$1332 – 50 day moving average

$1332 – 40 day moving average

$1328 – up trend line from 12/12 $1236 low

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

$1318 – 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– 200-day moving average

$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

$1294 – 12/29 low

$1287 – 12/28 low

$1281 – 12/27 low