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Gold Traders' Report - April 25, 2018

Jim Pogoda, Trader, Gold Bullion International 
APR 25, 2018

Gold traded lower overnight in a range of $1321 - $1332.10, pressed once again to support at $1321-23 (quadruple bottom, 3/29, 4/5, 4/6 and 4/23 lows).

It weakened against continued strength in the dollar as the DX rose to 91.18 (fresh 3-month high). The greenback was aided by a fresh 4-year high in the US 10-year bond yield (3.033%), and some softness in the yen (108.80 – 109.25, miss on Japan’s All Industry Activity Index), euro ($1.2235 - $1.2175, 2-month low), and pound ($1.3995 - $1.3935).

Global equities were a modest tailwind for gold, however, with the NIKKEI shedding 0.3%, the SCI fell 0.4%, European markets were down from 0.6% to 1.5%, and S&P futures were -0.3%. An unexpected rise in the API US Oil Inventory Report pushed oil lower (WTI down to $67.58) and weighed on stocks.
 
After the NY open, further strength in the DX (91.22) pressed gold through the quadruple bottom at $1321-23 to reach $1319, where support at the 100-day moving average held. However, a weaker opening to US stocks (S&P -25 to 2611, higher 10-year yield raising concerns over higher borrowing costs slowing the economy) led to a flight to quality that pushed the 10-year yield down to 3.007%.

The DX backed off to 91.04, and gold recovered. The yellow metal bounced back to $1322, where the former support became resistance and capped the advance.
 
Later in the morning, US stocks turned up (S&P +3 to 2636), despite a further drop in oil (WTI to $67.09, EIA reported an even higher build in US oil inventories than the API last night). 

The 10-year yield climbed back to 3.026%, and the dollar made a fresh high (DX to 91.24). Gold was pressed lower, but support in front of the 100-day moving average at $1319 held again.
 
Into the afternoon, US equities fluctuated either side of unchanged, and the 10-year yield ticked up to touch its overnight high at 3.033%.

The dollar, caught in the cross-currents, came off its earlier high, but remained firm between 91.11 -91.20. Gold drifted a bit higher, but again was capped at the prior support at $1323.
 
Open interest was off 3.8k contracts, showing a net of short covering from yesterday’s advance. Volume was a bit lower but still robust with 290k 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 Germany’s GfK Consumer Confidence, the ECB Rate Decision and Draghi’s Briefing, US Jobless Claims, Goods Trade Balance, Wholesale Inventories, Retail Inventories, Durable Goods, and the Kansas City Fed Manufacturing Index for near term direction.

In the news:

Resistance levels: 

$1321-23 – quadruple bottom, 3/29, 4/5, 4/6 and 4/23 low

$1325 - options

$1330 – up trend line from 12/12 $1236 low

$1332 – 40 day moving average

$1332-33 – double top - 4/24 and 4/25 highs

$1333 – 50 day moving average

$1335 – 4/23 high

$1334-35 triple bottom – 4/12, 4/13, and 4/20 lows

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

$1337 – 20-day moving average

$1338 – 4/17 low

$1341 – 4/19 low

$1345 – down trendline from 8/2013 weekly chart

$1346 – 4/20 high

$1350 – options

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

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

$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:

$1320 – 100-day moving average

$1319 – 4/25 low

$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

$1303– 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