Gold Traders’ Report - July 24, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International 
JUL 24, 2019

Gold rebounded last night, trading in a range of $1416.50 - $1428.20.  It was lifted by a decline in US equity futures, which were hit early during Asian time on news that the US Department of Justice launched an antitrust probe into big US tech companies, and later ahead of the NY open on weak earnings reports from Boeing and Caterpillar (S&P -12 to 2996) - which weighed against the upbeat news of face to face US-China talks restarting next week and firmer oil (WTI from $56.85 - $57.19, API reports much larger than expected draw in US Oil Inventories).  Gold was also boosted by a decline in global bond yields, which were softened  by weaker Japanese and European PMI data (German 10-year touches its all-time low of 0.39%, Japan’s 10-year to -0.152%, UK 10-year to 0.668%, US 10-year from 2.085% to2.05%).  Gold was able to advance despite the dollar advancing to a fresh 7-week high at 97.82 off of a tumble in the euro ($1.1155 - $1.1127, 2-month low) from the weak Eurozone PMI data.  Later during European time, gold climbed to its $1427.50 high against a pullback in the DX to 97.56.  The dollar was pressured by strength in the pound ($1.2426 - $1.2522, short covering) and a rebound in the euro ($1.1155). 

US stocks opened weaker (S&P -9 to 2996), hurt by a slight miss in the US Markit PMI Manufacturing Report (50 exp. 51), and New Home Sales (646k vs. exp. 658k).  The US 10-year bond yield slipped further to 2.039%, and the DX dipped to 97.55.  Gold advanced to $1429.50, but was capped there by resistance at $1430 (up trendline from 5/30 $1275 low) – its former support. 

Equities turned higher later in the morning (S&P +6 to 3011), led by gains in the Energy and Industrials sectors.  The move was aided by a further advance in oil (WTI to $57.61, EIA confirmed the API’s heavy 10.8M bbl drawdown in US Oil Inventories) and some optimistic remarks from Treasury Secretary Mnuchin on US-China trade. The 10-year bond yield bounced to 2.052%, and the DX recovered to 97.68.  Gold retreated in response, and traded down to $1423. 

Into mid-day, the S&P turned negative (-2 to 3003), while the 10-year yield ticked down to 2.05%.  The DX edged down to 97.61, and gold inched up to $1425.50.

In the afternoon, US stocks recovered to trade higher, helped by tech shares shaking off the new regulatory threat to take the NASDAQ to an all-time high.  The S&P recovered to 3011 (+6) while the 10-year yield hovered around 2.05%.  The DX moved back up to 97.67, and gold slid to $1420.50.  However, as we’ve seen many times in recent months, bargain hunting buying emerged to bring the yellow metal quickly back up to the $1424 level.  

Open interest was off big – 15.6k contracts – showing a sizeable amount of long liquidation from yesterday’s decline.  Volume surged with 462k contracts trading, but a fair amount of this was from the August – December futures contract rollover. 

All markets will continue to focus on geopolitical events (especially Brexit news and US / UK - 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 Germany’s IFO Business Climate, the ECB’s rate decision, US Wholesale Inventories, Retail Inventories, Durable Goods, Jobless Claims, Kansas City Fed’s National Activity Index, and comments from the ECB’s Draghi for near term direction.  

 

In the news:

Gold trades higher a day ahead of ECB gathering and as Brexit risks climb:   https://www.marketwatch.com/story/gold-trades-higher-a-day-ahead-of-ecb-gathering-and-as-brexit-risks-climb-2019-07-24?mod=hp_investing

 TD Securities – gold is holding up well:   https://www.forexlive.com/news/!/td-says-gold-is-holding-up-well-20190724

 Low-cost gold ETFs introduce new fiduciary challenge:   https://www.investmentnews.com/article/20190723/FREE/190729971/low-cost-gold-etfs-introduce-new-fiduciary-challenge

 Draghi or Lagarde – a meaningful difference for gold?:   https://www.gold-eagle.com/article/draghi-or-lagarde-meaningful-difference-gold

 Gold spot to futures gap at all-time high:   https://economictimes.indiatimes.com/markets/commodities/news/gold-spot-to-futures-gap-at-all-time-high/articleshow/70356115.cms

 

YTD Performance


12/31/2018

7/24/2019

Change
% Change
Gold


1282.5

1424

141.5

11.033%

DX


96.06

97.66

1.6

1.666%

S&P


2505

3010

505

20.160%

JYN


109.63

108.12

-1.51

-1.377%

Euro


1.1466

1.1144

-0.0322

-2.808%

US 10-year bond yield


2.69%

2.050%

-0.0064

-23.678%

Oil (WTI)


45.45

56.51

11.06

24.334%

 

Resistance levels: 

$1425 – options

$1427 – 7/11 high

$1430 - up trendline from 5/30 $1275 low

$1430 – 4 tops 7/17, 7/22, 7/23, and 7/24 highs

$1434 – 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

$1453– 7/18 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:

$1416 – 7/24 low

$1414-15  – double bottom - 7/18 and 7/23 lows

$1414– 20-day moving average

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

$1408 – 7/15 low

$1403 – 7/12 low

$1400 - 01 – triple bottom – 7/11, 7/16, and 7/17 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

$1382 - 40-day moving average

$1380 – 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

$1362 – 50-day moving average

$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

$1346 – 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

$1327– 100-day moving average

$1325 – options

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

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

$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 – 200-day moving average

*$1295 – 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