Gold Traders' Report - April 27, 2018

Jim Pogoda, Trader, Gold Bullion International 
APR 27, 2018

Gold traded either side of unchanged last night in a tight range of $1315.40 - $1321. It was unable to rally against some early weakness in the dollar (DX to 91.49) during Asian hours from some early strength in the yen (109.40 – 109.13, BOJ kept policy steady, removed time frame on reaching 2% inflation target).

Some pressure on gold came from news that North and South Korea agreed to formally end their 7-decade war, and pursue a complete denuclearization of the Peninsula, but it was supported at yesterday’s $1315 low. 

Later during European hours, the DX turned higher (DX to 91.88, resistance at the Jan 12 high) as the pound plunged ($1.3930 - $1.3750, miss on UK GDP) and the euro softened ($1.2115 - $1.2065, miss on French GDP, German Import Prices).

Gold remained well-supported, however, and was able to inch up to its high as bargain-hunting bids were prevalent.

A drift down in the US 10-year bond yield (2.988% - 2.966%) was supportive of gold while mostly firmer global equities were a headwind: NIKKEI +0.7%, SCI +0.2%, Eurozone up from 0.1% to 0.7%, S&P futures unch.

At 8:30 AM, a better than expected headline reading on US Q1 GDP (2.3% vs. exp. 2.0%) lifted US stock futures (S&P futures to 2676), and the 10-year yield (2.983%).

The DX jumped to 91.99, and pressed gold lower. However, support emerged to limit gold’s downside to $1317, well in front of the overnight/yesterday’s low (hints of gold being oversold).

Shortly afterward, focus turned to the Personal Consumption and  Core PCE components, which were slight misses. The DX pulled back to 91.71, and gold pushed through the overnight high to reach $1322.

At 10 AM, a better than expected University of Michigan Consumer Sentiment Report (98.8 vs. exp. 98) took the DX back up to 91.85, and gold ticked down to $1320.

However, the dollar’s strength was short-lived, as weaker US stocks turned down (S&P -8 to 2659, tech sector rolls over after earlier gains) and the 10-year yield slipped to 2.955%. The DX pulled back to 91.57 which gave gold a boost to $1323.90.

Into the afternoon, US stocks turned positive (S&P +8 to 2675, telecom and utilities lead gainers), while the 10-year yield remained steady around 2.96%. The DX stabilized between 91.60-91.70, and gold drifted back to trade between $1321-$1322.50.

Open interest was off 6.8k contracts, reflecting a decent amount of long liquidation (along with some profit taking by shorts) from yesterday’s decline. Volume was higher with 305k 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 Commitment of Traders Report, followed by reports Monday on Chinese PMI, German CPI and Retail Sales, US Personal Income, Personal Spending, PCE, Chicago PMI, Pending Home Sales, and the Dallas Fed’s 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

$1324 – 4/27 high

$1325 – options

$1331 – 50 day moving average

$1332 – 40 day moving average

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

$1334 – up trend line from 12/12 $1236 low

$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

$1336 – 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

$1350 – 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:

$1321 – 100-day moving average

$1319 – 4/25 low

$1315 – double bottom – 4/26 and 4/27 lows

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

$1303 – 3/1 low

$1304– 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