;

Gold Traders' Report - March 29, 2018

Jim Pogoda, Trader, Gold Bullion International 
MAR 29, 2018

Gold was a little choppy overnight, but traded in a fairly narrow range of $1323 - $1328.50, with activity somewhat muted ahead of the long holiday weekend.

Gold rose to its $1328.50 high during Asian hours, as the dollar dipped to its low (DX to 89.90) - pressured by a firmer yen (106.93 – 106.40) and pound ($1.4060 - $1.4095).

Later during European time, gold traded down to its low of $1323 (support at yesterday’s low)  as the DX rebounded to 90.15, with help from a softening euro ($1.2335 - $1.2295).

Gold was also weakened by the further lessening of tensions on the Korean Peninsula as the North and South announced their leaders would meet on 4/27 -  the first such meeting since 2007.

Firmer global equities were another headwind for gold with NIKKEI up 0.6%, the SCI + 1.2%, Eurozone shares were +0.4% to + 0.7%, and S&P futures were +0.4%.  A slight dip in oil (WTI to $64.20) weighed on equities. 

At 8:30 AM, better than expected readings on US Jobless Claims (215k vs. exp. 230K) and the PCE Deflator (yoy 1.8% vs. exp. 1.7%) was followed by a much stronger than expected Chicago PMI report at 9:45AM.

US stocks surged to 2641 by mid-day, though the US 10-year bond yield slid to 2.752%.

The DX took out its overnight high to reach 90.17, and gold was pressured down to through support at $1323 (overnight and yesterday’s low) to reach $1321.30.

In the afternoon, US stocks added to their gains (S&P finished +36 to 2641), with the tech sector making a strong comeback, and aided by a rebound in oil (WTI to $65.20).

Stocks also cheered news that a judge denied a request by Stormy Daniels’ lawyer to depose Trump.

The 10-year yield, however, fell to a fresh 7-week low at 2.739%.

The DX - caught in the cross-currents - traded a little lower but was able to hold above the key 90 level at 90.04.

Gold came off its lows to reach $1326, and was $1325 bid at 4PM with a loss of $1.

Open interest was again off heavily – 21.5k contracts – reflecting a large amount of long liquidation from yesterday’s tumble.

Volume was lower but remained very robust with 465k contracts trading, but inflated by the April-June contract rollover. 

Bulls were more than disappointed in the price action over the past 3 sessions. Gold got within $5 of taking out key technical resistance at $1362 that would have probably led to a breach of $1366 and a test of the $1375 high from July of 2016.

With the bullish way the large funds are positioned from last week’s COT Report, covering shorts and sidelined former longs piling back in would have certainly had a great opportunity to launch gold significantly higher, far north of the 4-year high at $1388.

Now, sitting some $30 lower, bulls are looking for gold to consolidate around the 50% retracement of the move up from $1307 - $1357 at $1332. 

Bears comfortable selling into strength have been handsomely rewarded, as they have seen gold’s forays north of $1340 as rally graveyards for months.

However, the bears have been equally frustrated as the yellow metal has consistently found strong buying support south of $1320, and prevented the large-scale fund long liquidation under the 200-day moving average at $1294 that they have been craving.

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 Monday on Japan’s Tankan Survey, China’s Caixin PMI, US Construction Spending, and ISM Manufacturing for near-term direction.

In the news:

Gold forges its best run since 2011

Gold’s old friend comes back

Resistance levels: 

$1327 – 20-day moving average

$1329 – 3/29 high

$1329 – 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

$1345 – down trendline from 8/2013 weekly chart

$1347 – 3/28 high

$1350 – options

$1355 – down trendline from 1/25/18 $1366 high

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

$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:

$1321 – 3/29 low

$1313 – 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