Gold Traders’ Report - July 16, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International 
JUL 16, 2019

Gold traded modestly lower last night, trading in a narrow range of $1411 - $1416.70.  It rose to its $1416.70 high during early Asian hours, but was unable to take out yesterday’s $1418 top.  The move was helped by a slight pullback in the US dollar (DX to 96.90), which was pressured from some strength in the yen (107.81).  Later during Asian hours and during European time, gold fell to its $1411 low, but bargain hunting bids kept the yellow metal from slipping further despite pressure from a rebound in the DX (97.19, takes out 100-day moving average at 97.14).  The dollar was helped by weakness in the pound ($1.2518 - $1.2409, weaker jobs data, debate reignites no-deal Brexit fears, 27-month low) and the euro ($1.1263 - $1.1217, miss on German ZEW, 10-year Bund yield to -0.315%).  Global equities were mixed to lower and offered some modest support to gold:  NIKKEI off 0.7%, the SCI fell 0.2%, European markets ranged from -0.1% to +0.4%, and S&P futures were flat.  Firmer oil prices (WTI from $59.28 - $59.18) were supportive of equities.  

Ahead of the NY open, stronger earnings reports from Goldman and J&J helped lift S&P futures (+4 to 3021), and took the US 10-year yield to 2.101%.  The DX climbed further to 97.28, but gold remained steady and holding around $1413.  

At 8:20 AM, a stronger than expected reading on US Retail Sales (0.4% vs. exp. 0.2%) overcame misses on Import Prices (-0.9% vs. exp. -0.7%) and Export Prices (-0.7% vs. exp. -0.3%).  S&P futures softened (3017, dampens aggressive rate cut hopes), while the US 10-year yield climbed to 2.138%.  The DX rose to 97.34 (1-week high) and gold traded lower.  Stops were hit under the overnight low to reach $1407.40, where support from yesterday’s low ($1408) and ahead of $1406 (up trendline from 5/30 $1275 low) held. 

At 9:15 AM, reports on US Industrial Production (unch vs. exp. 0.1%) and Capacity Utilization (77.9% vs. exp. 78.1%) were slightly lower than expected. US stocks turned higher (S&P +1 to 3015) after their open while the 10-year yield dipped to 2.123%, and the DX pulled back to 96.26.  Gold clawed back in response and traded up to $1413.

Into mid-day, US stocks turned negative (S&P -13 to 3001), with losses in the Energy and Utilities sectors weighing, and with a plunge in oil (WTI to $57.06, Secretary Pompeo says Iran is ready to negotiate about its missile program, easing supply risk worries) contributing to the move.  The 10-year yield bounced to 2.141% while the DX rebounded to 97.38, with the dollar aided by continued softness in the pound ($1.2396) and the euro ($1.1207).  Gold broke support at $1408 and $1406, and traded down to $1403 where support from Friday’s low held.  However, as we’ve witnessed countless times in the past months, bargain hunting buying emerged to bring gold back to $1408.  

Into the afternoon, dovish comments from the Fed’s Kaplan (who turned from being a bit hawkish recently – saying bond market may warrant a limited rate cut) and Powell (inflation at bottom end of historical ranges, uncertainty about global growth amid rising trade tensions, will act as appropriate to sustain the expansion) took US stocks higher (-5 to 3009), and brought the 10-year yield down to 2.116%.  The DX slipped to 97.27, and gold popped to $1413.  

Later in the afternoon, comments from Trump saying he could impose an additional $325B in tariffs on China, and that trade talks have a long way to go helped weaken US stocks (S&P -13 to 3001).  The 10-year yield hovered around 2.12%, but the DX climbed back to make a fresh intraday high at 97.44.  Gold retreated, and took out its prior low to reach $1401, where support from last Thursday’s low held. 

Some subsequent dovish remarks from the Fed’s Evans (2% inflation not a ceiling, sees a couple of rate cuts by year end, more accommodative policy would likely stimulate the economy) took the S&P up to 3006.  The 10-year yield remained around 2.12%, while the DX came off its high to reach 97.38.  Gold conversely came off its low to reach $1304. 

Open interest was up 4.8k contracts, showing a combination of new shorts and new longs from yesterday’s unchanged session.  Volume was lower with 263k contracts trading.  

All markets will continue to focus on geopolitical events (especially Brexit news and US-Iran tensions), 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 UK CPI and PPI, Eurozone Construction Output and CPI, US MBA Mortgage Applications, Housing Starts, Building Permits, Oil Inventories, and the Fed’s Beige Book for near term direction. 

 

In the news: 

Ray Dalio says it’s time to buy gold:   https://www.gurufocus.com/news/908692/ray-dalio-says-its-time-to-buy-gold

Hong Kong shoppers take a break from gold as prices reach 6-year peak:   https://www.scmp.com/print/news/hong-kong/hong-kong-economy/article/3018562/hong-kong-shoppers-take-break-gold-prices-reach

Goldman techs see more upside in gold:   https://www.forexlive.com/technical-analysis/!/goldman-sachs-techs-sees-more-upside-in-gold-20190715

Venezuela defies sanctions to sell $40 Million in gold reserves:   https://www.investing.com/news/commodities-news/venezuela-defies-sanctions-to-sell-40-million-in-gold-reserves-1924080

 

YTD Performance


12/31/2018

7/16/2019

Change
% Change
Gold


1282.5

1404

121.5

9.474%

DX


96.06

97.39

1.33

1.385%

S&P


2505

3006

501

20.000%

JYN


109.63

107.87

-1.76

-1.605%

Euro


1.1466

1.1208

-0.0258

-2.250%

US 10-year bond yield


2.69%

2.122%

-0.0056

-20.998%

Oil (WTI)


45.45

57.86

12.41

27.305%

 

 

Resistance levels: 

$1417-18 – triple top - 7/12, 7/15, and 7/16  highs

$1423 -24 – double top, 7/4 and 7/5 highs

$1425 – 6/28 high

$1425 – options

$1427 – 7/11 high

$1436 – upper channel line from 6/25 $1439 high

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

$1446 – 5/12/13 high

$1450 – options

$1479 – 5/5/13 high

$1488 – 4/28/13

$1496 – 4/14/13 high

$1500 – options

$1591 – 4/7/13

 

Support levels:

$1412 – double bottom – 6/25 and 7/3 lows

$1408 – 7/15 low

$1406– 20-day moving average

$1403 – 7/12 low

$1406 - up trendline from 5/30 $1275 low

$1401 – 7/11 low

$1400 – options

$1392 – 7/8 low

$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

$1381 – lower channel 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 - 40-day moving average

$1358 – 6/20 low

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

$1352 -  50% retracement of up move from 5/2 $1266 low to 6/25 $1439 high

$1348 – 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

$1346 – 50-day moving average

$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

$1320– 100-day moving average

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

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

$1300 – psychological level, options

$1300 – 50% retracement of up move from 8/16/18 $1160 low to 6/25 $1439 high

*$1292 – up trendline from 8/16/18 $1160 low

*$1290 – 200-day moving average

$1289 – double top - 5/17 and 5/30  highs

$1285-87 – 5 tops – 5/23, 5/24, 5/27, 5/28, and 5/29 highs

$1285– down trendline from 2/20 $1347 high

$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