Gold Traders’ Report - March 20, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International 
MAR 20, 2019

Gold had a modest pullback overnight, trading in a narrow range of $1301.70 - $1306.90 and awaiting this afternoon’s FOMC statement and Powell’s press conference.  The yellow metal traded against a small uptick in the US dollar (DX from 93.37 – 96.57), which was boosted from weakness in the yen (111.28 – 111.69), the pound ($1.3273 - $1.3212, May’s planned request for delaying Brexit was running into complications with MPs and the EU) and the euro ($1.1359 - $1.1334, softer German PPI).  Global equities were mostly firmer and weighed on gold with the NIKKEI +0.2%, the SCI unch, Eurozone shares ranged from flat to -1.3%, and S&P futures were +0.2%.  Higher oil prices (WTI from $58.80 - $59.37, surprise draw in US oil inventories from the API report last night) were supportive of stocks.  

 Ahead of and through the NY open, S&P futures turned negative (weak quarterly report from FedEx, EU’s $1.7B fine of Google weigh), while the US 10-year bond yield fell below 2.60% to 2.591%.  The DX slid to 96.36 (took out overnight low), and gold rallied. It took out the overnight high to reach $1309.55, where it was capped ahead of $1310-11 – (triple top, 3/13, 3/14, and 3/19  highs). 

 Later on, comments from PM May that she’s seeking only a 3-month Brexit delay to June 30, was met by a demand from Labour Leader Corbyn’s demand for a confirmation referendum on Brexit, along with comments from the EU’s Junker on not having an extension past the EP elections on May 23.  The pound tumbled to $1.13146, giving the DX a boost to 96.50.  Gold slipped in response, and retraced to $1305.75. 

 After a softer open, US stocks pared losses (S&P -5 to 2827), helped by a pop in oil (WTI to $59.94) from a much larger than expected draw in US Oil Inventories from the EIA Report (9.6M bbl vs. exp. 300k bbl build) along with larger than expected draws in gasoline and distillates.  The 10-year yield softened further, however, and ticked down to 2.589%.  The DX - which had pulled back to 93.38 – rose to 96.46, and pushed gold lower.  Gold fell through support at $1303-05 to reach $1301.70, where some bargain hunting bids brought it back to the $1303.50 area. 

 Toward mid-day, US stocks turned back down (S&P -16 to 2816, took out opening low), and the 10-year yield was steady around 2.59%.  The DX climbed however (96.51), helped by a decline in the euro ($1.1346).  Gold was knocked lower through some light stops under the earlier low and $1300 to reach $1298.60, where support from Monday’s $1298 low held. 

 Into the afternoon, US stocks continued to fall (S&P -20 to 2812), hurt by comments from Trump that tariffs will stay on until China complies with the trade deal.  The 10-year yield edged further down to 2.585%, and the DX dipped to 96.42.  Gold recovered to $1301.50, and then became steady between $1300-$1302 ahead of the FOMC statement.  

 Open interest was off 3.2k contracts, showing a net of short covering along with some profit taking by longs.  Volume increased with 248k contracts trading. 

 All markets will continue to focus on geopolitical events (especially Brexit news), developments with the Trump Administration (especially on US-China trade, potential legal issues), oil prices, Q4 corporate earnings, and will turn to this afternoon’s FOMC statement and Powell’s press conference followed by reports tomorrow on the ECB Economic Bulletin, UK’s Retail Sales, BOE rate US Philly Fed Index, Jobless Claims and Leading Index for near term direction.

 In the news:

Incrementum – In gold we trust report 2019:   https://gallery.mailchimp.com/b268a38a165b03979d95268dd/files/565e1833-833a-4025-94a3-6d4a0c7760d7/In_Gold_we_Trust_2019_Preview_Chartbook.pdf

 Standard Chartered – expects near term softness followed by strong second half of year:   https://www.cnbc.com/video/2019/03/19/before-gold-can-challenge-2018s-highs-metals-expert-sees-price-dip.html

 Scotiabank – Emerging markets CBs cutting rates and buying gold:   https://www.gbm.scotiabank.com/content/dam/gbm/market-insights/2019/march/EM-CBs-cutting-(rates)-and-buying-(Gold)-min.pdf

 Resistance levels: 

$1301 – down trendline from 2/20 $1347 high

$1303-05 – former breakout (6/15/18 top) and prior 5 bottom support (1/29, 2/7, 2/11, 2/13, and 2/14 lows)

$1305 – 50-day moving average

$1307 – 20-day moving average

$1306-7  – double top - 3/15 and 3/18  highs

$1305 – 20-day moving average

$1310 – 40-day moving average

$1310-11 – quadruple top, 3/13, 3/14,3/19, and 3/20  highs

$1314 – 50% retracement of down move from 2/20 $1347 high to 3/7 $1281 low

$1315 – 3/1 high

$1325 – options

$1327 – 2/28 high

$1330 – double top – 2/27 and 2/26 highs

$1333 –double top 2/22 and 2/25 highs

$1336 – 4/23/18 high

$1342 – double top - 2/19 and 2/21 highs

$1346-47 – double top 2/20 and  4/20/18 highs

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

*$1365-67– triple top – 8/2/16, 1/25/18 and 4/11/18 highs

*$1373-75 – double top – 7/6/16 and 7/11/16 highs

 Support levels:

$1300 – psychological level, options

$1298-99 – double bottom - 3/18 and 3/20 lows

$1295 – down trendline from 2/20 $1347 high

$1291-94 – quadruple bottom -  3/11, 3/12, 3/14, and 3/15 lows

$1289-91 – triple top – 3/5, 3/6, and 3/7 highs

$1281-84 – quadruple bottom 3/4, 3/5, 3/6, and 3/7 lows

*$1282 – up trendline from 12/28 $1274 low

*$1277 – 80  7 bottoms – 12/28, 1/4, 1/21, 1/22, 1/23, 1/24 and 1/25  lows

$1275 – options

$1274 – 12/28 low

$1274 – 100-day moving average

$1265-67 – 12/25, 12/26 ,and 12/27  lows

$1259 – 12/24 low

$1254 – 12/21 low

$1250 – options

$1247 – 200-day moving average