Gold Traders’ Report - May 22, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International 
MAY 22, 2019

Gold was either side of unchanged last night, trading in a choppy fashion though in a relatively narrow range of $1272.55 - $1277.30.  The yellow metal fell to its $1272.55 low during Asian and early European hours, where it found support at the up trendline from its 8/16/18 $1160 low.  It faded strength in the US dollar (DX from 97.99 – 98.12), which was boosted by a softer pound ($1.2719 - $1.2661, fresh 4-month low as May is pressured to quit, UK inflation miss) and euro ($1.1166 - $1.1148).  Gold recovered to $1275 later during European hours as the DX retreated to 97.66 - pressured by a rebound in the euro ($1.1174).  Global equities were mixed with the NIKKEI up 0.1%, the SCI was off 0.5%, European markets were up from 0.1% to 0.5%, and S&P futures were off 0.3%.  Further trade anxiety weighed on equities on reports that the US was considering cutting off US technology to another 5 Chinese companies including Hikvision, while President Xi said China was beginning a new “Long March” – signaling no quick end to the trade dispute.  A decline in oil prices (WTI from $63 to $62.35, API reported a surprise build in US Oil Inventories) also weighed on stocks.

 Just ahead of and through the NY open, comments from Treasury Secretary Mnuchin that there were no plans to travel to Beijing for trade talks yet knocked S&P futures lower (-16 to 2849).  The US 10-year bond yield fell from 2.43% to 2.403% and the DX slid further to 97.89.  Gold took out its overnight high at $1275.40 to reach $1277.40, but resistance ahead of $1278-79 (last two sessions’ highs) capped the advance.

 US stocks opened weaker - but in a pattern seen recently - recovered shortly thereafter into positive territory (S&P +2 to 2866).  The 10-year yield edged up to 2.412%, and the DX climbed back over 98 to reach 98.07.  Gold slipped back in response, but found support at $1273 (up trendline from 8/16 18 $1160 low).

 Equities turned back down into mid-day (S&P -12 to 2852), hurt by a further dip in oil (WTI to $61.66, EIA report showed larger builds in US oil and gasoline inventories than API report last night), and comments from Trump saying he won’t do an infrastructure deal with the Democrats while they continue to investigate him.  Declines in the Energy, IT, Industrials, Consumer Discretionary, and Financials sectors weighed.  The 10-year bond yield fell to 2.389%, but the DX rose to 98.12.  Gold was caught in the cross currents, but recovered to $1276.50. 

 Into the afternoon, US stocks softened a bit more, (S&P -13 to 2851), awaiting the release of the FOMC minutes from 5/1.  The 10-year yield ticked down to 2.386%, while the DX moved lower and traded either side of 98.05.  Gold was unable to capitalize on the weakness and edged lower as well, and became steady between $1274-75. 

 Open interest was up 0.2k contracts, showing a small net of new shorts from yesterday’s decline.  Volume was slightly lower with 259k 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 release of the FOMC meeting from 5/1, followed by reports tomorrow on Germany’s GDP and IFO, Eurozone PMI’s and release of the ECB’s April Meeting Minutes, US Jobless Claims, Markit PMI, New Home Sales, KC Fed Index, and comments from the Fed’s Kaplan, Daly, Bostic and Barkin for near term direction.

In the news: 

Is gold no longer a safe-haven:  https://www.home.saxo/en-gb/insights/content-hub/articles/2019/05/20/is-gold-no-longer-a-safe-haven

Kansas Governor signs sales tax exemption on precious metals:   https://coinweek.com/bullion-report/kansas-governor-signs-sales-tax-exemption-on-gold-silver-coins-precious-metals-bullion/

YTD Performance


12/31/2018

5/22/2019

Change
% Change
Gold


1282.5

1274

-8.5

-0.663%

DX


96.06

98.03

1.97

2.051%

S&P


2505

2851

346

13.812%

JYN


109.63

110.29

0.66

0.602%

Euro


1.1466

1.116

-0.0306

-2.669%

US 10-year bond yield


2.69%

2.386%

-0.003

-11.169%

Oil (WTI)


45.45

61.23

15.78

34.719%

 

Resistance levels: 

$1274-75 – double bottom  – 5/17 and 5/20 lows

$1275 – options

$1278-79 – triple top - 5/20, 5/21, and 5/22  highs

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

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

$1283 – 20-day moving average

$1286 – 40-day moving average

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

$1291 – 50-day moving average

$1296 – 4/12 high

$1297– 100-day moving average

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

$1299 – 5/16 high

$1300 – psychological level, options

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

$1304  - 5/14 high

$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:

*$1273 – up trendline from 8/16/18 $1160 low

$1273 – 5/22 low

$1269-70– triple bottom - 4/24, 5/3, and 5/21 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

*$1258 – 200-day moving average

$1250 – options

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