Gold Traders' Report - March 1, 2018

Gold sold off hard last night in a range of $1305 -$1318. It tripped some sell stops under $1316 (double bottom 2/12, 2/28), $1313 (2/27 low), $1311 (2/9 low), and $1306-7 (triple bottom, lows 1/3, 1/4, 2/8) to reach the $1305, where support in front of the $1304 low from 1/2 finally held (long liquidation seen).

The yellow metal was under pressure from a resurgent dollar, which took out a triple top at 90.71 to reach 90.86 – a 6 week high.

The greenback was helped by weakness in the yen (106.55 – 106.89), and the euro ($1.2212 - $1.2155).

A move down in the US 10-year bond yield 2.875% - 2.824% was gold supportive though, as well as mostly weaker global equities.

The NIKKEI fell 1.6%, the SCI was +0.4%, European markets were off 0.5% - 1.4%, and S&P futures were off 0.1%. 

 At 8:30 AM better than expected readings on Jobless Claims (210k vs .exp. 226k) and Personal Income (0.4% vs. exp. 0.3%) lifted S&P futures (2720) and the 10-year yield (2.857%).

The DX, however, failed to advance further, and instead dipped to 90.70.  Gold recovered in response, and rebounded to $1311.

At 10AM, a stronger than expected ISM Manufacturing Report (60.8 vs. exp. 58.7) outweighed a miss on Construction Spending (0 vs. exp. 0.2%), and lifted US stocks (S&P +2 to 2716).

The 10-year yield rose to 2.868%, and the DX pushed up further to 90.94, and pressured gold lower.  Gold took out support at the overnight low at $1305 to reach $1303 – a new low for the year.

Around 10:30 AM, however, Powell walked back some hawkish comments he made Tuesday about the economy (“we don’t see any strong evidence yet of a decisive move up in wages…Nothing in that suggests to me that wage inflation is at a point of acceleration”).

US stocks climbed (S&P +9 to 2722), while the 10-year yield slipped back to 2.844%.  The DX pulled back to 90.57, and gold rebounded to $1312.50.

Into the afternoon, US stocks turned negative, hurt after Trump announced steel (25%) and aluminum tariffs will be put into effect next week.

The S&P plunged 32 to 2681 (tech leads decliners).  As we’ve seen with past sharp decline in stocks, a flight to bonds ensued, taking the 10-year yield down to 2.813% - a 2-week low.

The dollar remained firm, however, and climbed back to 90.75.  Gold was pressured down to $1304, but support in front of the earlier $1303 low held.

Open interest was off 5k, showing a net of long liquidation from yesterday.  Volume was lower with 293k contracts trading. 

In the news:

Gold demand growing as supply starts to fall

February US Mint gold and silver eagles coin sales fall

Resistance levels: 

$1311 – 2/9 low

$1313 – 2/27 low

$1316 – 2/12 ,2/28  lows

$1319 – 22 – quadruple bottom, 2/13, 2/14, 2/21, and 2/22 lows

$1322 – 2/28 high

$1325 – 50 day moving average

$1326-27 – double bottom 2/23 and 2/26 lows

$1327 – up trendline from 12/12 $1236 low

$1328 – 2/20 low

$1330 – 20 day moving average

$1332 – double top 2/22 and 2/23 highs

$1333 – 40 day moving average

$1334 – down trendline from 2/16 $1362 high

$1336 – 2/21 high

$1336 – 50% retracement of down move from 1/25 $1366 high to 2/8 $1307 low

$1337 – 2/27 high

$1338 – 11/9 election night high

$1341 – 2/26 high

$1347 – down trendline from 8/2013 weekly chart

$1347 – 2/20 high

$1350 – 52 – triple top – 1/29 , 2/1, and 2/2 highs

$1350 – options

$1351 – 2/19 high

$1356-58 – triple top, 2/15, 2/14, 1/26 highs

$1360 – down trendline from 1/25 $1366 top

$1362 – 2/16 high

$1365-67 – 5 tops 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:

$1306-7 – triple bottom, lows 1/3, 1/4, 2/8

$1304 – 1/2 low

$1303 – 3/1 low

$1302 – 1/1 low

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

$1300 – psychological level, options

$1300 – 100-day moving average

$1294 – 12/29 low

$1287 – 12/28 low

$1287– 200-day moving average

$1281 – 12/27 low

$1281 – 50% retracement of up move from 7/10/17 $1205 low to 9/8/17 $1357 high