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Gold Traders' Report - March 28, 2018

Jim Pogoda, Trader, Gold Bullion International 
MAR 28, 2018

Gold traded lower overnight in a range of $1347.10 - $1335.

In similar price action to last evening, it managed to edge up to its $1347 high early during Asian hours as equities tumbled (follow through from losses in the US late yesterday afternoon, NIKKKEI -1.3%, SCI -1.4%, S&P futures to 2603), and the US 10-year bond yield slid to 2.743% (7-week low).

The DX slipped to 89.25, pressured by some strength in the euro ($1.2395 - $1.2421) and the pound ($1.4150 - $1.42).

 Later on, the dollar rebounded (DX to 89.54) amid a similar bounce in European shares and US equity futures (2618) from their earlier losses.

Gold tumbled through some sell stops under $1340 (yesterday’s low, former triple top resistance) to reach $1335 ahead of the NY open.

News that North Korea’s Kim Jong Un traveled to China, and the Chinese said they won a pledge from him to denuclearize the Korean peninsula also weighed on gold. 

At 8:30 AM, a stronger than expected 2nd Revision to US Q4 GDP (2.9% vs. exp. 2.7%) along with a beat on Wholesale Inventories (1.1% vs. exp. 0.5%) lifted S&P futures (2626) and the 10-year yield (2.781%).

The DX took out yesterday’s high (89.64) and last Friday’s top (89.74) to reach 89.87.  Gold sank further, but found support at $1331 (50-day moving average, 3/23 low, 50% retracement of $1307 low on 3/20 to  $1356 high yesterday). 

By late morning, US stocks turned lower (S&P – 19 to 2593), pressured by heavy declines in Apple (Goldman forecasts lower iphone sales) and Amazon (reports saying Trump wants to go after Amazon on anti-trust grounds).

A dip in oil from a larger than expected build in US oil inventories (WTI to $63.70) also weighed on stocks.

The 10-year yield dipped back to 2.744%, but held its overnight low.

The dollar, however, remained fairly steady, and traded between 89.70 – 89.80 ,with weakness in the yen (106 – 106.46), the pound $1.4160 - $1.4093), and the euro ($1.2405 - $1.2335) propping up the greenback. Despite the above price action, gold broke support at $1331, and slid to $1326. 

In the afternoon, US stocks turned positive (S&P +20 to 2633, with telecom, real estate, and consumer staples offsetting the declines in tech.  The 10-year yield climbed to 2.784% (poor 7-year note auction), and the dollar rose to 90.04.  Gold slumped a bit further but was supported at $1325 (3/22 low).

Open interest was off big -21.9k contracts – showing mostly long liquidation (decent amount of profit taking) but some early short covering as well from yesterday’s decline.  Volume surged with over 600k contracts trading (603k). 

All markets will continue to focus on the volatility in the equity and bond markets, geopolitical events, developments with the Trump Administration, oil prices, and will turn to reports tomorrow on Japanese Retail Sales, German Unemployment, UK GDP, Eurozone CPI, US Jobless Claims, Personal Income, Personal Spending, PCE Deflator, Chicago PMI, U. Michigan Sentiment, Baker-Hughes Rig Count, and comments from the Fed’s Harker for near-term direction. 

In the news:

All fall down? Is the predicted crash starting to hit?

MAQB – the commodities set to soar and slump over the next 2 years

Resistance levels: 

$1327 – 20-day moving average

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

$1330 – 40 day moving average

$1332 – 50 day moving average

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

$1335 – 3/22 high

$1337 – 3/21 high

$1338 – 11/9 election night high

$1340 – 3/27 low

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

$1343 – 3/26 low

$1345 – down trendline from 8/2013 weekly chart

$1347 – 2/20 high

$1350 – options

$1350-51 – double top – 2/19 and 3/23 highs

$1356 - 57 – double top, 3/26 and 3/27 highs

$1356 – down trendline from 1/25/18 $1366 high

$1362 – 2/16 high

$1365 – down trendline from 7/6/16 $1375 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:

$1325 – 3/22 low

$1324 – down trend line from 2/16 $1362 high

$1320-22 – double top 3/16 and 3/19 highs

$1317 – 3/20 high

$1317 – up trend line from 12/12 $1236 low

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

$1307-10 – quadruple bottom – 3/16, 3/19, 3/20, and 3/21 lows

$1310 – 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

$1294– 200-day moving average

$1287 – 12/28 low

$1281 – 12/27 low