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Gold Traders' Report - March 15, 2018

Jim Pogoda, Trader, Gold Bullion International 
MAR 15, 2018

Gold was either side of unchanged last night in a range of $1321.70 - $1328. In price action that we’ve seen for the past 3 sessions, gold rose to its $1328 high during Asian time, as the dollar softened (DX to 89.62).

The greenback was pressured from a strengthening yen (106.36 – 105.78), as market fears of growing protectionism pushed currency traders to the safe haven Japanese currency.

Later on, the dollar rebounded (DX to 89.86) against euro weakness ($1.2383 - $1.2345) that drove gold lower, where support at yesterday’s $1322 low held ahead of the NY open.

A modest firming in global equities was also a headwind for gold, with the NIKKEI +0.1%, the SCI was flat, European exchanges were up between 0.1% - 0.2%, and S&P futures were +0.1%.

Firmer oil prices (WTI to $61.35, IEA increases forecast for global oil demand by 90k bbl/day in 2018 to 99.3M bbl/day) aided the up move in stocks.

At 8:30 AM, a lower than expected reading on US Jobless Claims (226k vs. exp. 228k) along with a higher than forecast reading on the Empire State Manufacturing Index (22.5 vs. exp. 15) helped lift S&P futures to 2760.

The DX climbed to 89.99, and pressed gold lower. The yellow metal tripped some light stops under $1322 (overnight and yesterday’s low), bringing it to $1317.

At 10AM, a slight miss on the NAHB Housing Market Index (70 vs. exp. 72) helped bring US stocks back to unchanged after opening firmer, and knocked the DX down to 89.85.  Gold rose in response, and ticked up to $1319.50.

During the late morning, US stocks turned back higher (S&P +14 to 2763, United Health and industrials lead gainers).

The US 10-year bond yield rose to 2.835%, and the dollar climbed to 90.04.

Gold was pressed lower to $1315.70 where support at the quadruple bottom at $1313-15 (3/2, 3/9, 3/12, and 3/13 lows) held.

In the afternoon, news that special counsel Robert Meuller subpoenaed the Trump Organization for documents related to Russia sent stocks lower.

The S&P turned negative (-7 to 2742), and the 10-year yield pulled back to 2.813%.

The DX likewise slid to 89.92, and gold rebounded to $1319. Later in the afternoon, however, US equities clawed back (S&P finished unchanged at 2749).

The 10-year yield ticked up to 2.828%, and the dollar took out its prior high to reach 90.15. Gold ticked further down to $1314.80, but again, support at the quadruple bottom held. It was $1316 bid at 4PM with a loss of $9.

Open interest was up 11k contracts, showing a net of new longs on yesterday’s move over resistance at $1328-29.  Volume was lower with 288k contracts trading.

Bulls were disappointed with gold’s $9 loss today, given that equities were steady and the 10-year yield held over 2.80%.

However, they maintain that the dollar’s recent bounce from the 2/16 3-year low at 88.25 is only a minor correction within its year-old downtrend, and expect a retest of that level to drive gold higher.

Bulls will need to overcome initial resistance at the quadruple top at $1328-30 to be able to breach the down trendline from the $1362 high from 2/16 at $1331. Above here, they expect buy stops to propel the market past the triple top at $1341.

Bears remain comfortable selling into rallies, and expect renewed strength in equities, higher bond yields and a continued bounce from the 88.25 low in the DX to pressure gold lower.

They will look for a breach below support at $1313-15 (up trendline from the $1236 low from 12/12/16, quadruple bottom) to bring into play key support at $1303-05 (100-day moving average, 50% retracement of up move from 12/12/17 $1236 low to 1/25/18 $1366 high,3/1 low).

Below here, bears expect further long liquidation to lead to a test of the 200-day moving average at $1290.

All markets will continue to focus on the volatility in the equity and bond markets, geopolitical events, developments with the Trump Administration (especially tariffs), oil prices, and will turn to reports tomorrow on Japanese Industrial Production, Eurozone CPI, US Housing Starts, Building Permits, Industrial Production, Capacity Utilization, U. Michigan Sentiment, Baker-Hughes Rig Count, and the Commitment of Traders Report for near-term guidance.

In the news:

Over $60 billion wiped off value of cryptocurrencies in 24 hours as bitcoin slide continues

Peak gold may be irrelevant – for now

Russia – plane loses $368 million cargo of gold, platinum, and diamonds

Resistance levels: 

$1327 – 20-day moving average

$1328 -30 – quadruple top, 3/8, 3/13, 3/14 ,and 3/15 highs

$1331 – 50 day moving average

$1331 – down trend line from 2/16 $1362 high

$1332 – 40 day moving average

$1335 – 50% retracement of down move from 1/25 $1366 high to 3/1 $1303 low

$1338 – 11/9 election night high

$1341 – triple top 2/26, 3/6, and 3/7 highs

$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:

$1313-15 – quadruple bottom, lows 3/2, 3/9, 3/12, 3/13

$1314 – up trend line from 12/12 $1236 low

$1305 – 100-day moving average

$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

$1294 – 12/29 low

$1290– 200-day moving average

$1287 – 12/28 low

$1281 – 12/27 low