Gold Traders’ Report - May 1, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International 
MAY 1, 2019

Gold traded modestly lower last night in a range of $1277.85 - $1283.70.  Activity in all markets was muted with much of the globe on May Day holiday and ahead of this afternoon’s FOMC Meeting Statement and subsequent press conference from Chair Powell.  Gold slipped to its $1277.85 low during Asian and early European time where it found support from Monday’s $1278 low.  Early strength in the US dollar (DX to 97.56) weighed on the yellow metal, as did a pop in S&P futures (+12 to 2961) led by Apple’s impressive earnings report yesterday afternoon, and upbeat comments from Treasury Secretary Mnuchin on the US-China talks (just concluded productive meetings with China’s Vice Premier Liu He, will continue our talks in Washington next week).  However, a drop in oil (WTI from 63.85 - $63.08) from the API reporting a larger than expected build in US Oil Inventories softened the gains in stocks.  Gold recovered to $1283 during later European hours as S&P futures pared some gains (2955), and the DX pulled back to 97.34 (1-week low).  The greenback was pressured by strength in the pound ($1.3033 - $1.3075, optimism over cross-party Brexit talks, beat on UK House Price data, expected hawkish tilt from BOE tomorrow) and the euro ($1.1213 - $1.1239). 

 At 8:15 AM, a much stronger than expected ADP Employment Change Report (275k vs. exp. 180k) took S&P futures back up (2959) and lifted the US 10-year bond yield back over 2.50% from a dip to 2.496% last night.  The DX rebounded to 97.47, and gold softened to $1279.50.

 By late morning, however, US stocks were knocked back to unchanged (S&P to 2946) after absorbing worse than expected readings on ISM Manufacturing (52.8 vs. exp. 55 – worst since 10/16) and Construction Spending (-0.9% vs. exp. 0.1%).  A larger than expected build in US Oil Inventories from the EIA (9.9M build vs. 6.8M from API and 2.1M expected) that reversed oil’s bounce (WTI from $63.90 - $63.20) also contributed to the down move.  The 10-year yield dipped back down to 2.471% (3-week low) and the DX fell to 97.26 – where support from the double bottom at 97.26-27 from last week held.  Gold rallied back in response and took out its overnight high to reach $1285.

 Into mid-day, US equities turned higher (S&P +9 to 2954) with gains in the IT sector leading the advance.  The 10-year yield edged up to 2.482%, but the DX remained soft, trading either side of 97.30.  Continued strength in the pound ($1.3093, May suggests Labour’s customs union policy and the government’s are similar) and the euro ($1.1250) kept the greenback in check.  Gold was caught in the cross currents, but pulled back to $1280.50. 

 In the afternoon, US stocks fell back to near unchanged (S&P -2 to 2944) while the US 10-year yield remained steady around 2.48% ahead of the FOMC statement.  The DX was similarly stable around 97.30, and gold traded narrowly between $1280.50 - $1282.  

 Open interest was up 2.4k contracts, reflecting a net of new longs from yesterday’s advance.  Volume was higher with 249k 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), Q1 corporate earnings, oil prices, and will turn to this afternoon’s FOMC meeting statement and Powell’s press conference followed by reports tomorrow on German Retail Sales and PMI, Eurozone PMI, UK PMI and BOE Rate Decision, US Challenger Job Cuts, Jobless Claims, Nonfarm Productivity, Unit Labor Costs, Durable Goods, Factory Orders and comments from the BOE’s Carney and ECB’s Praet for near term direction.

 In the news:

Fed Preview – the good, the bad, and the ugly factors that determine the dollar’s reaction:   https://www.fxstreet.com/analysis/fed-preview-the-good-the-bad-and-the-ugly-factors-that-determine-the-dollars-reaction-201904291412?utm_source=onesignal&utm_medium=push&utm_campaign=analysis

 US Mint gold eagle coin sales fall 26.1% in April:   https://www.reuters.com/article/us-mint-american-eagle-gold-coin-sales-f/u-s-mint-american-eagle-gold-coin-sales-fall-26-1-pct-in-april-idUSFWN22C1B1?rpc=401&

 A true measure of Chinese gold consumption:   https://www.sharpspixley.com/articles/lawrie-williams-a-true-measure-of-chinese-gold-consumption_292557.html

YTD Performance


12/31/2018

5/1/2019

Change
% Change
Gold


1282.5

1282

-0.5

-0.039%

DX


96.06

97.3

1.24

1.291%

S&P


2505

2945

440

17.565%

JYN


109.63

111.16

1.53

1.396%

Euro


1.1466

1.1246

-0.022

-1.919%

US 10-year bond yield


2.69%

2.48%

-0.0018

-6.739%

Oil (WTI)


45.45

63.21

17.76

39.076%

 

Resistance levels: 

$1285 – 5/1 high

$1286 – up trendline from 12/28 $1274 low

$1286 -20 day moving average

$1286-7 – double top - 4/29 and 4/30  highs

$1289 – double top 4/16 and 4/26 highs

$1291 – 4/15 high

$1294– 100-day moving average

$1293-95 –quadruple top 4/2, 4/3, 4/4, and 4/5 high

$1294 – 40-day moving average

$1296 – 4/12 high

$1298 – 50-day moving average

*$1299 – down trendline from 2/20 $1347 high

$1300 – psychological level, options

$1301 – 4/10 low

$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)

$1306 – 4/9/high

$1309 - 12 - triple top – 3/28, 4/10 and 4/11 highs

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

$1319 - 3/27  high

$1322  -3/26 high

$1325 – options

$1325 – 3/25 high

$1327 – 2/28 high

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

$1333 –double top 2/22 and 2/25 highs

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

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

*$1350 – down trendline from 8/25/13 $1433 high

$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:

$1280 – 4/30 low

$1278-80 – quadruple top - 4/17, 4/18, 4/22, and 4/24 highs

$1277-78 – double bottom – 4/29 and 5/1 lows

$1275 – options

$1273 – quadruple bottom - 4/16, 4/17, 4/22, and 4/25 lows

$1271 – 4/18 low

$1269 -4/24 low

$1265-67 – quadruple bottom - 12/25, 12/26, 12/27, and 4/23 lows

*$1265 – up trendline from 8/16/18 $1160 low

$1259 – 12/24 low

$1254 – 12/21 low

$1253 – 50% retracement of up move from 8/16/18 $1160 low to 2/20 $1347 high

*$1253 – 200-day moving average

$1250 – options

$1242-43 – double bottom – 12/19 and 12/20 lows