Gold Traders’ Report - August 14, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International 
AUG 14, 2019

Gold rebounded overnight, trading in a range of $1494.35 - $1518.35.  It slumped to its $1494.35 low during Asian time against an early rise in Asian equities along with a modest uptick in S&P futures.  However, during European time, gold rallied sharply to its $1518.35 high, boosted by a decline in European equity markets (off from 0.6% - 1.2%) and S&P futures (-0.6%) and falling bond yields (near $16T in global debt now with negative yields).  Equities were hurt by worse than expected reports on Chinese Industrial Production (lowest growth in 17 years) and Retail Sales, German GDP (-0.1%), and Eurozone Industrial Production.  Investors flocked to the usual safe havens as the yen strengthened (105.76), and global bond yields plummeted.  The German 10-year bund yield made a fresh all-time low (-0.654%), and the US 10-year gilt yield fell to 0.444%.   The US 30-year yield sank to 2.024% (record low), while the 10-year yield slipped to 1.581% (35-month low), falling below the 2-year yield (1.595%) and inverting.  This spooked investors further as this inversion has typically been an historical recession predictor – and sent equities further south.  Gold was able to advance despite the US dollar remaining fairly steady (DX between 97.66 – 97.85), pressured by strength in the yen, but buoyed by weakness in the euro ($1.1160). 

At 8:30 AM, better than expected readings on US Import Prices (0.2% vs. exp. -0.1%) and Export Prices (0.2% vs. exp. 0) lifted the US 10-year bond yield to 1.618%, and the DX to 97.81.  Gold pulled back in response, but found support at $1510 (former double top resistance).  

US stocks opened much weaker (S&P -51 to 2875), with heavy losses in the Financials, Energy, IT, Consumer Discretionary, and Communication Services sectors.  The 10-year bond yield turned down again to 1.583%, and the DX softened to 97.74.  Gold rebounded to $1517, but was unable to take out the overnight high.

Later in the morning, US stocks continued to soften amid heavy concern over the yield curve inversion (S&P –62  to 2864) and hurt by a surprise build in US oil inventories that tugged oil lower (WTI to $54.13).  The dollar climbed, however (DX to 98.00), lifted by continued weakness in the euro ($1.1137, German 10-year yield dips further to -0.657%).  Gold was caught in the cross currents and fell to $1506 before strong bargain hunting bids lift the market back to take out its overnight high to reach $1520.  

Into mid-day, US equities fell further (S&P -84 to 2841), while the 10-year yield hovered around 1.585%.  While the DX remained fairly firm between 97.93 – 98, gold probed higher to reach $1524. 

In the afternoon, US stocks pared some losses (S&P -72 to 2854), helped by some upbeat comments from former Fed Chair Yellen (US most likely not entering a recession). The US 10-year bond yield edged up to 1.593%, and the DX returned to its prior intraday high of 98.  Gold fell in response, but found support at $1512.  However, dip buying quickly emerged and brought the yellow metal back to $1519. 

Open interest was off 10.4k contracts, reflecting a net of some early short covering to the early $1535 high along with a decent amount of long liquidation down to the $1480 low from yesterday.  Volume surged with 656k contracts trading. 

All markets will continue to focus on geopolitical events (especially Brexit news and US / UK - Iran tensions, Hong Kong protests, Argentina), developments with the Trump Administration (especially on US-China trade, potential legal issues), Q2 corporate earnings, oil prices, and will turn to reports tomorrow on Japan’s Industrial Production and Capacity Utilization, UK’s Retail Sales, US Empire State Manufacturing, Nonfarm Productivity, Unit Labor Costs, Philly Fed, Retail Sales, Jobless Claims, Industrial Production, Capacity Utilization, Housing Market Index, and  Business Inventories for near term direction. 

 

In the news:

Indian buyers find a 20% discount on gold not alluring enough: https://economictimes.indiatimes.com/markets/commodities/news/buyers-find-a-20-discount-on-gold-not-alluring-enough/articleshow/70669457.cms

Scotiabank metals monthly:   https://www.gbm.scotiabank.com/content/dam/gbm/market-insights/2019/august/Metals%20Monthly_July.pdf

Recession warning pile up for the battered global economy:   https://advisorhub.com/recession-warnings-pile-up-for-the-battered-global-economy/

Gold could hit $2k in a world of negative yields:   https://www.cnbc.com/2019/08/13/gold-could-hit-2000-in-a-world-full-of-negative-yields.html

Bond markets are sending global recession warning:   https://www.cnbc.com/2019/08/14/bond-markets-are-sending-one-big-global-recession-warning.html

 

YTD Performance


12/31/2018

8/14/2019

Change
% Change
Gold


1282.5

1519

236.5

18.441%

DX


96.06

98.00

1.94

2.020%

S&P


2505

2848

343

13.693%

JYN


109.63

105.92

-3.71

-3.384%

Euro


1.1466

1.1137

-0.0329

-2.869%

US 10-year bond yield


2.69%

1.583%

-0.011

-41.065%

Oil (WTI)


45.45

55.15

9.7

21.342%

 

 

Resistance levels: 

$1524 – 8/14 high

$1535 – 8/13 high

$1591 – 4/7/13

 

Support levels:

$1519 – 8/12 high

$1510 -  double top – 8/7 and 8/8 highs

$1500 – options

$1494 – 8/14 low

$1480 – 8/13 low

$1472 – 8/7 low

$1457 – 8/6 low

$1455– 20-day moving average

$1450 – options

$1438 – 8/5 low

$1436-39 triple top – 6/25 7/2, and 7/3 highs

$1433-34 – double top 7/25 and 7/30 highs

$1432 - 40-day moving average

$1430 – 8/2 low

$1425 – options

$1423 – up trendline from 5/30 $1275 low

$1422 – 7/30 low

$1414 – 50-day moving average

$1414-16  – 5 bottoms - 7/18, 7/23, 7/24, 7/26, and 7/29 lows

$1411 – 7/25 low

$1400 - 01 – 4 bottoms – 7/11, 7/16, 7/17, and 8/1 lows

$1400 – options

$1390 – 7/10 low

$1386-87 – double bottom, 7/5 and 7/9 lows

$1382 -84 – triple bottom – lows 6/21, 7/1, and 7/2

$1378 – trend line from 6/21 $1383 low

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

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

$1360 -  50% retracement of up move from 5/2 $1266 low to 7/18 $1453 high

$1358 – 6/20 low

$1353-56 – quadruple top – 4/12/18, 4/18/18, 4/19/18, and 6/18 highs

$1351 – 100-day moving average

$1345 – down trendline from 8/25/13 $1433 high

$1344-48 – 6 tops , 2/20 and  4/20/18, 6/5, 6/7, 6/13, and 6/17 highs

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

$1338 – double bottom -6/14 and 6/18 lows

$1338 - 40 – triple top – 6/6, 6/10 and 6/12 highs

$1332-33 – double bottom – 6/13 and 6/17 lows

$1327-30 – triple top, 6/3, 6/4, and 6/11 highs

$1325 – options

$1325-26 – triple bottom – 6/5, 6/10, and 6/12  lows

$1324 – double bottom 6/4 and 6/11 lows

*$1314 – 200-day moving average

$1309-12 - triple top – 3/28, 4/10 and 4/11 highs

$1307 – 50% retracement of up move from 8/16/18 $1160 low to 6/25 $1439 high

$1301 – double top 5/13 and 5/15 highs

$1300 – psychological level, options

*$1297 – up trendline from 8/16/18 $1160 low

$1279 – 5/29 low

$1276 – 5/28 low

$1275 – options

$1274-75 – double bottom  – 5/17 and 5/20 lows

$1273 – 5/22 low

$1269-70– triple bottom - 4/24, 5/3, and 5/21 low

$1265-67 – 5 bottoms - 12/25, 12/26, 12/27, 4/23, and 5/2  lows

$1259 – 12/24 low

$1254 – 12/21 low

$1250 – options

$1242-43 – double bottom – 12/19 and 12/20 lows