Gold Traders’ Report - April 8, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International 
APR 8, 2019

Gold firmed overnight, climbing in a range of $1291.50 - $1298.35.  It took out some light stops over $1293-95 (quadruple top 4/2, 4/3, 4/4, and 4/5 highs) and $1297 (4/1 high) to reach its $1298.35 high where it was capped ahead of $1300 (3/29 high, options).  Gold’s advance was fueled by a pullback from the recently up trending US dollar, as the DX slipped form 97.39 – 97.15.  The DX was pressured by strength in the yen (111.73 – 111.35, risk off, BOJ’s Kuroda upbeat, current account widened), the euro ($1.1212 - $1.1250, stronger Eurozone Sentix Investor Confidence), and a modest increase in the pound ($1.3030 - $1.3050, cautious optimism on orderly Brexit as May continues negotiations with Labour, meeting with Merkel and Macron tomorrow).  The yellow metal was also aided by dip in the US 10-year bond yield (2.486%, 1 week low) and global equities with the NIKKEI down 0.2%, the SCI was off 0.1%, European markets ranged from +0.1% to -0.3%, and S&P futures were -0.2%.  Despite further progress cited by both sides in the ongoing US-China trade negotiations, focus turned to a likely tough upcoming earnings season.  Unrest in Libya were also gold supportive, and it helped lift oil prices (WTI to $63.53) to a fresh 5-month high. 

 Gold rallied through its NY open (covering and new longs seen) taking out resistance at $1300 to reach $1303.80 (high since 3/28) where resistance at $1303-05 (old resistance level) held.  Further softness in S&P futures contributed to the move (2890, declines in GE and Boeing from analyst downgrades), as well as a further retreat in the DX (97). 

 After opening weaker (S&P -12 to 2880), US stocks rebounded into the mid- morning hours (S&P -5 to 2887), helped by a better than expected reading on US Factory Orders Ex-Transportation, with the headline readings on Factory Orders (-0.5%) and Durable Goods ( -1.6%) coming in as expected.  The US 10-year bond yield moved up to 2.515%, and the DX had a modest recovery to 97.05.  Gold, lacking follow through to get past $1303-05 retreated in response to $1300.

 Later in the morning, US stocks continued to rebound (S&P -3 to 2889), helped by a surge in oil (STI to $64.36).  Strength in the Consumer Staples and Energy sectors led the recovery.  The US 10-year yield hovered around 2.515%, while the DX ticked up to 97.09.  Gold fell below $1300, and tripped some light sell stops that took the market back to $1296.50, where support ahead of the old resistance between $1293-95 held. 

 Into the afternoon, US stocks turned mildly lower (S&P -5 to 2887), while the 10-year yield climbed to a fresh high of 2.519%.  The DX - caught in the cross currents – worked lower, and found support at its prior 97 low.  Gold edged higher, but traded narrowly between $1297.50 - $1298.50. 

 Open interest was off 0.1k contracts, showing a small amount of long liquidation from Friday’s decline.  Volume was lower with 238k contracts trading. 

 All markets will continue to focus on geopolitical events (especially Brexit news), developments with the Trump Administration (especially on US-China trade, potential legal issues), oil prices, and will turn to reports tomorrow on the US NFIB Small Business Optimism Index and JOLTS Job Openings, and comments from the Fed’s Clarida for near term guidance.

In the news:

China adds 11.2 tonnes of gold to reserves in March: https://www.sharpspixley.com/articles/lawrie-williams-chinese-central-bank-adds-112-tonnes-of-gold-in-march_291930.html

 WGC – monthly central bank statistics:   https://www.gold.org/goldhub/data/monthly-central-bank-statistics

YTD Performance


12/31/2018

4/8/2019

Change
% Change
Gold


1282.5

1298

15.5

1.209%

DX


96.06

97.02

0.96

0.999%

S&P


2505

2888

383

15.289%

JYN


109.63

111.46

1.83

1.669%

Euro


1.1466

1.1265

-0.0201

-1.753%

US 10-year bond yield


2.686

2.519

-0.167

-6.217%

Oil (WTI)


45.45

64.19

18.74

41.232%


Resistance levels: 

$1300 – 3/29 high

$1300 – psychological level, options

$1302 – 20-day moving average

$1303 – 3/21 low

$1304 – 4/8 high

$1303-05 – former breakout (6/15/18 top) and prior 5 bottom support (1/29, 2/7, 2/11, 2/13, and 2/14 lows)

$1306-7 – double top - 3/15 and 3/18 highs

$1307 – 3/22 low

$1307 – 40-day moving average

$1308 – 3/27 low

$1308 – 50-day moving average

$1311 – 3/25 low

$1312 – 3/28 high

$1313 – up trendline from 3/7 $1281 low

$1314 – 50% retracement of down move from 2/20 $1347 high to 3/7 $1281 low

$1315 – down trendline from 2/20 $1347 high

$1315 – 3/22 high

$1317 – 3/20 high

$1319-20 – double top - 3/21 and 3/27  highs

$1325 – options

$1325 – 3/25 high

$1327 – 2/28 high

$1330 – double top – 2/27 and 2/26 highs

$1333 –double top 2/22 and 2/25 highs

$1336 – up channel line from 3/4 $1297 high

$1336 – 4/23/18 high

$1342 – double top - 2/19 and 2/21 highs

$1346-47 – double top 2/20 and  4/20/18 highs

$1353-56 – triple top – 4/12/18, 4/18/18 and 4/19/18 highs

*$1365-67– triple top – 8/2/16, 1/25/18 and 4/11/18 highs

*$1373-75 – double top – 7/6/16 and 7/11/16 highs

 Support levels:

$1293-95 –quadruple top 4/2, 4/3, 4/4, and 4/5 highs

$1291 – 4/8 low

$1287-89 – quadruple bottom 3/28, 3/29, 4/1 and 4/3 lows

$1285 – triple bottom 3/8, 4/2, and 4/5  lows

*$1285– 100-day moving average

$1281-84 – 5 bottom 3/4, 3/5, 3/6, 3/7, and 4/4 lows

*$1284 – up trendline from 12/28 $1274 low

*$1277-80 - 7 bottoms – 12/28, 1/4, 1/21, 1/22, 1/23, 1/24 and 1/25 lows

$1275 – options

$1274 – 12/28 low

$1265-67 – 12/25, 12/26 ,and 12/27  lows

$1259 – 12/24 low

$1254 – 12/21 low

$1250 – options

$1249 – 200-day moving average