Gold Traders’ Report - May 15, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International 
MAY 15, 2019

Gold was a little choppy last night, trading either side of unchanged in a range of $1293 - $1299.30.  It slipped to its $1293 low during Asian and early European hours against some modest strength in the US dollar (DX to 97.58, helped by softer euro on miss in German GDP), and rising global equities.  The NIKKEI was up 0.6%, the SCI was up 1.9% (shrugged off misses on Chinese Industrial Production, Retail Sales, and Fixed Asset Investment, market supported by state buying and expectations for continued stimulus) and S&P futures were +0.3%.  Gold turned and rallied to its $1299.30 high during later European time, however, helped by a softening in the DX (97.44), a turn down in global stocks (European markets were off from 0.3% to 0.5%, and S&P futures reversed to be down 0.4%), and increasing US-Iran tensions (US orders non-emergency to leave Iraq).  Weaker oil prices (WTI from $61.70 - $60.85, API report showed surprise large build in US oil inventories) weighed on stocks.  

 Ahead of and through the NY open, gold rallied past its overnight high to reach $1301.  The yellow metal was lifted by a tumble in global bond yields (German bund from -0.075% to -0.132%, UK Gilt from 1.105% to 1.031%, US 10-year from 2.417% to 2.363% - 7-week low) and a further decline in S&P futures (-25 to 2815).  A miss in US Retail Sales (-0.2% vs. exp. 0.2%), Industrial Production (-0.5% vs. exp. unch) and Capacity Utilization (77.9% vs. exp. 78.7%) contributed to the move.  Gold was able to move up despite the dollar also advancing (DX to 97.70), with the greenback being lifted by weakness in the euro ($1.1178, ECB’s Coeure says global headwinds weighing on Eurozone growth) and the pound ($1.2827, Labour says gaps remain between their party and the government on Brexit). 

 After a weaker opening, US stocks rallied sharply into mid-day (S&P +17 to 2852), off of news that Trump was going to delay the implementation of auto tariffs for at least 6 months.  A better NAHB Housing Market Index Report (66 vs. exp. 64) and a rebound in oil (WTI to $62.31, EIA report showed smaller increase in US Oil Inventories than last night’s API report, attacks on Middle East oil infrastructure still resonating) aided the move which was led by gains in the Communications Services and IT sectors.  The US 10-year bond yield bounced to 2.391%, but the DX sank to 97.46 as the euro rallied strongly ($1.1180 -$1.1225, European auto makers were prime targets of tariffs).  Gold was caught in the cross currents, and fell back to $1295.  

 Into the afternoon, US equities backed off their highs (S&P +14 to 2849), while the 10-year yield slipped back to 2.377%.  The DX was choppy between 97.46 – 97.58, and gold recovered to $1297.50  - retaking the 100-day moving average at $1297.  

 Open interest was up 8.5k contracts, showing a combination of new longs - early to yesterday’s $1303 high, later on the pullback toward $1296 - along with some new shorts on yesterday’s decline.  Volume was much lower but still healthy with 246k 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 reports tomorrow on the Eurozone’s Trade Balance, US Housing Starts, Building Permits, Jobless Claims, Philly Fed Index, and comments from the ECB’s Praet and Guindos and the Fed’s Kashkari for near term direction.

YTD Performance


12/31/2018

5/15/2019

Change
% Change
Gold


1282.5

1297

14.5

1.131%

DX


96.06

97.53

1.47

1.530%

S&P


2505

2854

349

13.932%

JYN


109.63

109.51

-0.12

-0.109%

Euro


1.1466

1.1207

-0.0259

-2.259%

US 10-year bond yield


2.69%

2.378%

-0.0031

-11.467%

Oil (WTI)


45.45

62.08

16.63

36.590%


Resistance levels: 

$1300 – psychological level, options

$1301 – double top 5/13 and 5/15 highs

$1304  - 5/14 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)

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

$1307 – 50% retracement of down move from 2/20 $1347 high to 4/23 $1266 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:

$1297– 100-day moving average

$1296 – 4/12 high

$1293-94 – double bottom - 5/14 and 5/15 lows

$1292 – 50-day moving average

$1291-92 – double top - 4/15 and 5/8 highs

$1291 – 40-day moving average

*$1290 – down trendline from 2/20 $1347 high

$1287 – up trendline from 12/28 $1274 low

$1286-9 – 8 tops – 4/16, 4/26, 4/29, 4/30, 5/1, 5/7, 5/9, and 5/10 highs

$1282-83 – double bottom – 5/10 and 5/13 lows

$1282 -20 day moving average

$1277-80 – quadruple bottom – lows 5/6, 5/7, 5/8, and 5/9 lows

$1275 – options

$1273 – 5 bottoms - 4/16, 4/17, 4/22, 4/25, and 5/1  lows

$1271 – 4/18 low

*$1270 – up trendline from 8/16/18 $1160 low

$1269 – double bottom - 4/24 and 5/3 low

$1265-67 – 5 bottoms - 12/25, 12/26, 12/27, 4/23, and 5/2  lows

$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

*$1256 – 200-day moving average

$1250 – options

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