Gold Traders' Report - June 20, 2018

Jim Pogoda, Trader, Gold Bullion International 
JUN 20, 2018

Gold traded either side of unchanged last night in a narrow range of $1271.30 - $1276.35. It was pressured to its low by further strength in the dollar, with the DX making a fresh 11-month high at 95.32.

The dollar was aided by a dip in the euro ($1.1535, ECB’s Nowotny sees euro depreciating against the dollar) along with weakness in the pound ($1.3147, fresh 6-month low).

A rebound in global equity markets were also a headwind for gold with the NIKKEI up 1.2%, the SCI +0.3% (PBOC injects $37B into system, call to investors to stay calm and rational), European shares were +0.4% to 1.3%, and S&P futures +0.3%. A modest increase in oil (WTI from $65.05 - $65.48, API showed larger than expected draw in US oil inventories) were supportive of stocks.

After the NY open, the DX broke below 95 to reach 94..91, largely ignoring a better than expected reading on the US Current Account Balance (-$124.1B vs. exp. -$129B).

A rally in the pound ($1.3203, UK on track to avoid defeat over its Brexit bill in Commons) weighed on the dollar. Gold traded higher in response but topped out at $1276.25, and failed to take out the overnight high.

Later in the morning, some hawkish comments from the Fed’s Powell (“with unemployment low and expected to decline further, inflation close to our objective, and the risks to the outlook roughly balanced, the case for continued gradual increases in the federal funds rate is strong”, “high demand for workers should support wage growth and labor force participation”) overshadowed a worse than expected reading on US Existing Home Sales (5.43M vs. exp. 5.53M).

The US 10-year yield rose from 2.902% to 2.917%, and brought the DX up to 95.13. Gold retreated in response, but found support at $1273.50.

At 10:30 AM, US stocks bounced (S&P +7 to 2770), aided by an advance in oil (WTI to $66.14) from a higher than expected draw in US oil inventories (-5.9M bbl vs. exp. -1.9Mbbl), news that Disney raised its bid for Fox, and a proposal that car tariffs between the EU and the US be eliminated. The 10-year yield remained over 2.91%, and DX stayed firm at 95.12. Gold remained well bid, however, only ticking down to $1275.30.

Into the afternoon, US stocks moved higher (S&P +13 at 2775), as did the 10-year yield (2.921%). The dollar, however, ticked a tad lower, with the DX hovering either side of 95. Gold retreated to $1272, where support in front of the overnight low at $1271.30 held.

Open interest was up 0.2k contracts, showing a slight amount of net new shorts from yesterday’s decline. Volume increased with 300k contracts trading.

All markets will continue to focus on geopolitical events, developments with the Trump Administration (especially on US-China trade), oil prices, and will turn to reports tomorrow on Japanese Machine Tool Orders, BoE Rate Decision, Eurozone Consumer Confidence, US Jobless Claims, Philly Fed Index, House Price Index, Leading Indicators, and the Fed’s release of Bank Stress Tests for near-term direction.

In the news:


Resistance levels: 

$1273 – double bottom, 12/25 and 12/26 lows

$1275 – options

$1275 – 6/15 low

$1276 – 6/20 high

$1281-82 – double bottom, 5/21  and 12/27 lows

$1282 – 6/18 high

$1284 – 6/19 high

$1288 – double bottom, 5/22 and 5/23 lows

$1290 – 50% retracement of down move from 6/14 $1309 high to 6/19 $1270 low

$1292-95 –5 bottoms – 6/6, 6/7, 6/8, 6/11, 6/12, and 6/13

$1294 - up trendline from 12/15/16 $1123 low

$1296 – 20-day moving average

$1298 – down trendline from 5/15 $1315 top

$1299 – 6/13 high

$1300 – psychological level, options

$1300 – 6/12 high

$1300 -03–7 tops 6/1, 6/5,6/6, 6/7, 6/8, 6/11, and 6/12 highs

$1301 – 50% retracement of up move from 12/12/17 $1236 low to 1/25/18 $1366 high

$1302 – 40 day moving average

$1306– 200-day moving average

$1306 -08 – quadruple top, 5/24, 5/25, 5/29, and 5/31 highs

$1306 – down trendline from 4/11 $1365 high

$1307 – down trendline from 4/23 $1336 high

$1310 – 50 day moving average

$1315 – 5/15 high

$1318 -19 – quadruple top 5/3, 5/7, 5/8 and 5/9 highs

$1320– 100-day moving average

$1322-23 – 5/10 and 5/14 highs

$1325-27 – quadruple  top, 4/26, 4/27, 4/30, and 5/11 highs

$1325 – options

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

$1335 – 4/23 high

$1334-35 triple bottom – 4/12, 4/13, and 4/20 lows

$1346 – 4/20 high

$1350 – options

$1355 - 57 – quadruple top, 3/26, 3/27, 4/18, and 4/19 highs

$1364 – 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:

$1271 – 6/20 low

$1271 – up trendline from 1/9/17 $1171 low

$1270 – 6/19 low

$1265 – 12/22 low

$1261-63 – 12/19, 12/20, and 12/21 lows

$1253 – double bottom – 12/15, 12/18 lows