Gold Traders’ Report - May 29, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International 
MAY 29, 2019

Gold traded higher last night, climbing in a range of $1279.10 - $1285.65.  The yellow metal was lifted by a further drop in global bond yields (Japan’s 10-year to -0.096% - near 3-year low, German 10-year bund to -0.174% - near 3-year low, UK gilt to 0.901% - 19-month low, US 10-year to 2.226% - 20-month low) and continued weakness in global equities.  The NIKKEI fell 1.2%, the SCI gained 0.2%, European shares were off from 1.3% to 1.7%, and S&P futures were -0.8%.  Stocks were hurt by the ratcheting up of tensions in the US-China trade war, with China’s state-run media saying Beijing is considering limiting the export of rare earths, and Huawei filing a motion for summary judgment in its lawsuit against the US government.  A decline in oil (WTI from $59.09 - $57.43, worries of eco slowdown from prolonged trade dispute overshadow ongoing supply issues) contributed to the weakness in equities.  A modestly firmer dollar limited gold’s gain, however, as the DX rose from 97.95 – 98.06.  The DX was lifted by continued weakness in the euro ($1.1172 - $1.1147, weak German employment data, ECB’s Rehn says first rate hike is now further away) and softness in the pound ($1.2665 - $1.2626, growing concerns of a no-deal Brexit). 

US stocks opened weaker (S&P -25  to 2779) with losses in the Energy, Health Care and Consumer Discretionary sectors leading the decline.  The US 10-year bond yield continued to plunge, making a fresh 20-month low at 2.22%.  The DX firmed, however (DX to 98.14), lifted by further weakness in the euro ($1.1135).  Gold was caught in the cross currents, but traded lower to $1282 in a choppy fashion.  

Equities continued to soften into mid-day (S&P -36 to 2766), with a further decline in oil (WTI to $56.87, 2-month low) weighing.  The 10-year yield softened more to 2.213%, but the DX pushed higher (98.21).  The greenback was supported by further euro weakness ($1.1124, German 10-year yield down to -0.179%) and the pound ($1.2611).  Gold remained in the cross currents and probed lower, but found support at $1280. 

Into the afternoon, US stocks had a modest bounce (S&P -22 to 2779), and the 10-year yield ticked up to 2.227%.  The DX edged down to 98.10-15, and gold bounced to $1283.50.

Open interest was off 12.2k contracts, showing a fair amount of long liquidation from yesterday’s decline.  Volume exploded with 587k contracts trading – still inflated by the June-August contract rollover. 

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 US GDP, Personal Consumption, Core PCE, Jobless Claims, Retail Inventories, Wholesale Inventories, Pending Home Sales, Oil Inventories, and comments from the Fed’s Clarida for near term guidance. 

In the news: 

Gold:  prices stabilizing – Commerzbank:   https://www.fxstreet.com/news/gold-prices-stabilising-commerzbank-201905281049

YTD Performance


12/31/2018

5/29/2019

Change
% Change
Gold


1282.5

1282

-0.5

-0.039%

DX


96.06

98.15

2.09

2.176%

S&P


2505

2780

275

10.978%

JYN


109.63

109.47

-0.16

-0.146%

Euro


1.1466

1.1132

-0.0334

-2.913%

US 10-year bond yield


2.69%

2.227%

-0.0046

-17.089%

Oil (WTI)


45.45

58.34

12.89

28.361%

 

Resistance levels: 

$1283 – 20-day moving average

$1284 - 40-day moving average

$1285-87 – 5 tops – 5/23, 5/24, 5/27, 5/28, and 5/29 highs

$1285 – 5/24 high

$1289 – 5/17 high

$1289 – 50-day moving average

$1295 – down trendline from 2/20 $1347 high

$1297– 100-day moving average

$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:

$1279 – 5/29 low

$1276 – 5/28 low

*$1276 – up trendline from 8/16/18 $1160 low

$1275 – options

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

$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

*$1260 – 200-day moving average

$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

$1250 – options

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