Gold Traders’ Report - September 13, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International 
SEP 13, 2019

  • Gold declines against a further climb in bond yields
     
    Overnight – gold rallies to $1509 against a weaker US dollar
  • ·  
  •       Gold advanced overnight, climbing in a range of $1496 - $1509. 
  • ·        The move was fueled by a pullback in the US dollar (DX from 98.40 – 97.99), which was pressured from strength in the yen (108.26 – 107.90) from stronger Japanese Industrial Production and Capacity Utilization), the pound ($1.2330 - $1.2474) on reports the EU is ready to grant another Brexit extension), and the euro ($1.1065 - $1.1109) which continued its rebound after yesterday’s plunge from ECB’s easing. 
  • ·        The yellow metal was able to climb despite significant gains in global equities (NIKKEI up 1.1%, SCI +0.8%, European markets unch. to +0.4%, and S&P futures +0.3%) and a further rise in the US 10-year bond yield (1.768% to 1.815%, fresh 5-week high) from additional easing of US-China trade tensions (Trump signals he would be willing to consider an interim deal, China to buy US pork and soybeans and will exempt them and other farm goods from additional tariffs)
  • ·        At 8:30 AM, US Retail Sales were better than expected (0.4% vs. exp. 0.2%, last month’s reading revised higher). 
  • ·        S&P futures edged higher (+10 to 3021), and the US 10-year bond yield climbed to 1.84%. 
  • ·        The DX recovered to 98.19, and gold retreated to $1498. 
  • ·        However, as we’ve seen many countless times recently, dip buying emerged to quickly lift the market back to $1501.  
  • ·        US stocks opened softer (S&P -1 to 3009), hurt by a plunge in oil (WTI from $55.62 - $54.67, demand concerns along with OPEC declining to cut output further).
  • ·        The US 10-year bond yield edged down to 1.824% while the DX pulled back to 98.13. 
  • ·        Gold climbed further in response, reaching $1506 – but was unable to challenge the overnight high. 
  • ·        At 10AM, stronger than expected reports on the University of Michigan Consumer Sentiment (92 vs. exp. 90.8) and Business Inventories (0.4% vs. exp. 0.3%) took US stocks higher (S&P +7 to 3017) into mid-day, with gains in the Materials, Financials, and Industrials sectors leading the advance. 
  • ·        The 10-year yield rose to 1.891% - a whopping 46 bp higher than its 1.429% low from 9/3. 
  • ·        The DX rose to 98.30, and gold sold off. 
  • ·        Stops were hit under $1500 and the overnight low $1496 to reach $1489, where support at yesterday’s low and ahead of $1487 (up trendline from 5/30 $1275 low) held. 
  • ·        Open interest was up 3.4k contracts, showing a net of new longs from yesterday’s advance. 
  • ·        Volume surged with 505k 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 this afternoon’s Commitment of Traders Report and reports Monday on China’s Fixed Assets, Industrial Production, Retail Sales, and Jobless Rate, and the US Empire State Manufacturing Index for near term direction.  Looming ahead next Wednesday is the FOMC’s rate decision.  

 

In the news: 

Gold see-saw:   https://www.sharpspixley.com/articles/lawrie-williams-gold-see-saw-up-in-europe-down-in-usa_296308.html

 Hong Kong gold market losing shine amid political unrest:   https://uk.reuters.com/article/us-hongkong-protests-gold/hong-kong-gold-market-losing-shine-amid-political-unrest-idUSKCN1VY00H

 

YTD Performance


12/31/2018

9/13/2019

Change
% Change
Gold


1282.5

1490

207.5

16.179%

DX


96.06

98.20

2.14

2.228%

S&P


2505

3012

507

20.240%

JYN


109.63

108.10

-1.53

-1.396%

Euro


1.1466

1.1077

-0.0389

-3.393%

US 10-year bond yield


2.69%

1.891%

-0.008

-29.598%

Oil (WTI)


45.45

55.12

9.67

21.276%

 

Resistance levels: 

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

$1498 – 9/11 high

$1498 – 9/9 low

$1500 – psychological level, options

$1501 – 9/10 high

$1503 – 9/6 low

$1506 – 9/5 low

$1509 – 9/13 high

$1515 – 9/9 high

$1515 – 20-day moving average

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

$1524 – 9/12 high

$1525 – options

$1528 – 9/6 high

$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:

$1489 – double bottom - 9/12 and 9/13 lows

$1489 - 40-day moving average

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

$1487 – up trendline from 5/30 $1275 low

$1480 – 8/13 low

$1473 – 50-day moving average

$1472 – 8/7 low

$1457 – 8/6 low

$1450 – options

$1438 – 8/5 low