Gold Traders' Report - September 12, 2018

Jim Pogoda, Trader, Gold Bullion International 
SEP 12, 2018

Gold traded either side of unchanged last night in a tight range of $1192.75 - $1198.65, fading some modest movement in the DX.

The yellow metal moved up to its high during early during Asian time, but was halted by resistance at the triple top at $1198-99 (9/5, 9/10, and 9/11 highs).

The move was largely in reaction to some dollar bearish comments from Jeffrey Gundlach – which knocked the DX to 95.02.

The greenback trended higher (95.29) for the remainder of the night, which pressured gold down to its $1192.75 low.

Global equities were mixed with the NIKKEI off 0.2%, the SCI was down 0.3%, European markets ranged from flat to +0.6%, and S&P futures were flat.

Firmer oil prices (WTI from $69.50 - $70.14, API US reported larger than expected draw in US crude stocks) were supportive of stocks.

At 8:30 AM, US PPI was lower than expected (-0.1% vs. exp. 0.2%), which took S&P futures lower (-5 to 2885), and sent the US 10-year bond yield down to 2.955%.

The DX slipped to 95.07 and gold moved higher. However, the yellow metal’s advance was capped again at the triple top at $1198-99.

Later in the morning, a report from Dow Jones that the US is proposing a new round of trade talks with China launched US stocks higher (S&P +8 to 2895).

Equities were also boosted by a surge in oil (WTI to $71.23, the EIA report showing a larger than expected draw in US Oil Inventories), and some dovish comments from the Fed’s Bullard (stuck to his view that the Fed should not raise rates any further because there is little danger of an inflation surge).

The 10-year yield rose to 2.968%, while the dollar plunged. The DX took out support at the double bottom at 94.87 on the way to 94.74 as the yuan strengthened (6.8680 – 6.8959) - and ignited a short covering rally in gold. Gold broke through resistance at $1198-99 and $1200 to reach $1204 – where resistance at the triple top (9/3, 9/4, and 9/7 highs) there held.

Into the afternoon, hawkish comments from the Fed’s Brainard (Fed could raise rates above neutral rate, won’t let prospect of flattening or inverted yield curve deter them from continuing to hike rates) contributed to the pullback in stocks (S&P -4 to 2883), and helped the 10-year yield tick up to 2.968%. The DX rebounded to 94.91, and gold pulled back to $1202.

Later in the afternoon, a Bloomberg report that the EU was said to begin redrafting Irish Brexit protocol to appease the UK sent sterling higher ($1.3010 - /$1.3078), and knocked the DX back down near its prior low. Gold drove higher in response, taking out $1204 and $1206 (40-day moving average) to reach $1208, where resistance at quadruple top from $1207-09 (8/29, 8/30, 8/31, and 9/6 highs) held.

AT 2PM, the Fed’s Fed’s Beige book was somewhat mixed, with reports that the economy expanded at a moderate pace offset with some concerns over the uncertainty from the situation on tariffs, and overall, not portraying an economy that is in danger of overheating.

Open interest was off 0.7k contracts, showing a small net of short covering from yesterday’s gain. Volume was higher with 275k contracts trading.

All markets will continue to focus on geopolitical events (especially emerging markets), developments with the Trump Administration (especially on US-China and US-Canada trade, potential legal issues), oil prices, and will turn to reports tomorrow on Japan’s Machine Orders, German CPI, Rate decisions by the ECB and BOE, US CPI, IU Claims, and comments from the Fed’s Bostic for near-term guidance.

 In the news:

Resistance levels: 

$1207 - 09 –5 tops, 8/29, 8/30, 8/31, 9/6, and 9/12 highs

$1214 – double top – 8/13 and 8/28 highs

$1214 – 50 day moving average

$1216-18 – 5 tops, 8/6, 8/7, 8/8, 8/9 and 8/10 highs

$1220-21 – 8/2 and 8/3 highs

$1225 – 7/30 high

$1225  - options

$1227-28 – 7/27, 7/31 highs

$1234-35 – triple top, 7/23, 7/25, and 7/26 highs

$1235 -38 – 6 bottoms –7/16/18, 7/13/18, 12/12/17, 7/18/17, 7/19/17, 7/20/17 lows

$1245-46 – double top – 7/16 and 7/17 highs

$1250  - options

$1251-53 – triple bottom 7/4, 7/5, and 7/6 lows

$1253 – 100-day moving average

$1259-61 – quadruple top – 6/27, 7/4, 7/5, and 7/6 highs

$1262 – 50% retracement from 4/11 $1365 high to the 8/16 $1160 low

$1266 – 7/9 high

$1268 – 6/26 high

$1270-73 – triple top, 6/21, 6/22, and 6/25 highs

$1275 – options

$1275 – 6/15 low

$1276 – 6/20 high

$1281-82 – double bottom, 5/21  and 12/27 lows

$1282 – 6/18 high

$1284 – 6/19 high

$1286– 200-day moving average

$1288 – double bottom, 5/22 and 5/23 lows

$1292-95 –5 bottoms – 6/6, 6/7, 6/8, 6/11, 6/12, and 6/13

Support levels:

$1206 – 40 day moving average

$1202-04 – triple top – 9/3, 9/4, and 9/7 highs

$1200 – psychological level, options

$1199 - up trendline from the 8/16 $1160 low

$1198-99 – triple top - 9/5, 9/10, and 9/11  highs

$1197 – 20-day moving average

$1190-92 – triple bottom, 9/4, 9/5, and 9/10  lows

$1188 – 9/11 low

$1188 – up trendline from 10/19/08 $682 low

$1187 – 50% retracement of up move from 8/16 $1160 low to 8/28 $1214 high

$1183 - 84 – triple bottom - 8/20, 8/23, and 8/24  lows

$1175 – options strike

$1171-73– quadruple bottom – 8/15, 8/17, 1/6/17 and 1/9/17 lows

$1166 – 1/5/17 low

$1160 – 8/16  low

$1156 – 1/4/17 low

$1150 – options

$1146 – 1/4/17 low