Gold Traders’ Report - September 11, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International 
SEP 11, 2019

  • Gold finds support at $1485-86, recovers to $1496 after 4-session $72 decline
     
    Overnight – gold rebounds to $1495 against a pullback in bond yields
  • ·        Gold staged a modest rebound last night, trading higher in a range of $1486 - $1495, with its price action remaining nervous and choppy. 
  • ·        Climbed to its $1495 high during Asian and early European time where it met resistance at the old support area $1493-94, largely fading a moderate pullback in the recently soaring US 10-year bond yield (1.74% to 1.709%).  
  • ·        The move down in yield was aided by tweets from Trump saying, “The Fed should take rates down to zero or less, and we should then start to refinance our debt.” 
  • ·        Gold managed its advance despite mostly firmer global equities (NIKKEI +1%, SCI off 0.4%, European shares up from 0.5% to 1.0%, and S&P futures +0.1%), which were lifted by a report that China was exempting tariffs on 16 US products ahead of high level trade talks planned for next month (though this seemed more self-serving than conciliatory).
  • ·        Firmer oil prices (WTI from $57.52 - $58.26) from the API report showing a much larger than expected draw in US Oil Inventories was supportive of stocks. 
  • ·        Gold also was able to overcome the headwind of a firmer US dollar as the DX took out triple top resistance at 98.51-54 to reach 98.67. 
  • ·        The greenback was supported by weakness in the euro ($1.1055 - $1.0995) as IfW downgraded German growth was downgraded to 0.4% from 0.6% for 2019, with forecast of -0.3% in Q3 and participants expecting a dovish ECB tomorrow.    
  • ·        At 8:30 AM, the US PPI report was hotter than expected:
  • ·        PPI Final Demand MoM (0.1% vs. exp. 0)
  • ·        Ex Food and Energy (0.3% vs. exp. 0.2%)
  • ·        PPI YoY (1.8% vs. exp. 1.7%)
  • ·        S&P futures edged up (+6 to 2984)
  • ·        US 10-year bond yield popped to 1.751%  - a fresh 1-month high. 
  • ·        The DX climbed further to 98.69, and gold was pressed back to $1487.  However, dip buying ahead of the overnight low at $1486 held, and brought the market quickly back to the $1490 area. 
  • ·        US stocks opened weaker (S&P -3 to 2975)
  • ·        The 10-year yield retreated to 1.723%
  • ·        The DX remained firm, however (98.70), supported by continued weakness in the euro ($1.0984) and a decline in the pound ($1.2370 - $1.2321) from added Brexit turmoil as a Scottish court ruled that PM Johnson’s move to suspend Parliament was unlawful.  
  • ·        Gold climbed in response and took out its overnight high at $1495 to reach $1498 – where resistance at the 9/9 low held. 
  • ·        From the late morning and into mid-day, news that Trump considered the lifting of some sanctions on Iran – prompting the pushback from and eventual firing of National Security Advisor John Bolton yesterday sent oil plunging (WTI to $55.85) – despite the EIA confirming the API with a much larger than expected draw in US Oil Inventories
  • ·        US stocks shrugged off oil’s weakness and turned higher (S&P +13 to 2992)
  • ·        The 10-year yield ticked up to 1.732%. 
  • ·        The DX edged up to 98.75
  • ·        Gold slipped back to $1492, but yet again, bargain hunting buying took the market back up to $1495
  • ·        Into the afternoon, US stocks edged higher (S&P +16 to 2996), led by gains in Apple (continued positive response to new products / services announced yesterday) and the IT Communication Services, Health Care and Utilities sectors. 
  • ·        The 10-year yield hovered around 1.735%, but the DX pulled back to 98.64 against a bounce in the euro ($1.1010). 
  • ·        Gold recovered to $1496 but was unable to take out its prior high.
  • ·        Open interest was off 3k contracts, showing a net of long liquidation from yesterday’s decline. 
  • ·        Volume increased with 412k contracts trading.

 

Looking ahead

All markets will continue to focus on geopolitical events (especially Brexit news and US / UK - Iran tensions, Hong Kong protests), developments with the Trump Administration (especially on US-China trade, potential legal issues), oil prices, and will turn to reports tomorrow on Japan’s Machine Orders and Tertiary Industry Index, China’s Foreign Direct Investment, Germany’s CPI, Eurozone Industrial Production, ECB Rate Decision, US Real Weekly Earnings, CPI, Jobless Claims, and comments from the ECB’s Mario Draghi for near term direction.

 

In the news:

WGC – Gold – the most effective commodity investment:   https://www.gold.org/goldhub/research/gold-when-investing-in-commodities

 The ECB decision is coming  - here’s what to expect:   https://www.marketwatch.com/story/the-ecb-decision-is-coming-heres-what-to-expect-2019-09-11

 Gold, bond prices nearing peak – Jim Cramer:   https://www.cnbc.com/video/2019/09/10/gold-bond-prices-nearing-peak-says-jim-cramer.html

 

YTD Performance


12/31/2018

9/11/2019

Change
% Change
Gold


1282.5

1496

213.5

16.647%

DX


96.06

98.63

2.57

2.675%

S&P


2505

2992

487

19.441%

JYN


109.63

107.76

-1.87

-1.706%

Euro


1.1466

1.1006

-0.046

-4.012%

US 10-year bond yield


2.69%

1.737%

-0.0095

-35.331%

Oil (WTI)


45.45

56.04

10.59

23.300%

 

Resistance levels: 

$1498 – 9/11 high

$1498 – 9/9 low

$1500 – psychological level, options

$1501 – 9/10 high

$1503 – 9/6 low

$1506 – 9/5 low

$1515 – 9/9 high

$1519 – 20-day moving average

$1517-20 (triple bottom – 8/29, 8/30 and 9/2 lows, 20-day moving average)

$1528 – 9/6 high

$1525 – options

$1535 – 8/13 high

$1549 - $1550 –triple top - 8/26, 8/29, and 9/3 highs

$1553 – 9/5 high

$1557 – 9/4 high

$1591 – 4/7/13 high

$1600 – options

$1604 – 3/31/13 high

$1614 – 3/24/13 high

 

Support levels:

$1493-4 – 5 bottoms 8/14, 8/19, 8/20, 8/22, 8/23 lows

$1485 - 86 – double bottom - 9/10 and 9/11 lows

$1486 - 40-day moving average

$1481 – up trendline from 5/30 $1275 low

$1480 – 8/13 low

$1472 – 8/7 low

$1471 – 50-day moving average

$1457 – 8/6 low

$1450 – options

$1438 – 8/5 low