Gold Traders’ Report - September 26, 2019

 
SEP 26, 2019

Gold Posts Modest Bounce in Choppy Trading to $1507 After Yesterday’s Selloff - Gold Today September 26, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International

 

Overnight – choppy between $1503-$1511, slides against upbeat comments from China on trade talks

·        Gold traded either side of unchanged last night in a range of $1503 - $1511, retaining its choppy tone.  

·        Rallied to its $1511 high during late Asian hours, fading declines in S&P futures (-8 to 2979), the US 10-year bond yield (1.694%), and the DX (98.85). 

·        However, gold slipped down to its $1503 low during European time as S&P futures rebounded on upbeat comments from the Chinese Commerce Ministry (it was in close communication with the US, making preparations to ensure “positive progress” is made during negotiations, and confirmed that they have made significant purchases of US soy and pork). 

·        The 10-year bond yield moved back up to 1.72%, and the DX climbed to 99.13 – a 3-week high. 

·        The dollar was helped by weakness in the pound ($1.2380 - $1.2302, ongoing Brexit / UK political uncertainty) and the euro ($1.0965 - $1.0922 -  29-month low, resignation of more hawkish ECB board member Lautenschlaeger and overcome a better than expected reading on Germany’s GfK Consumer Confidence). 

 

Early economic data, release of whistleblower complaint against Trump generate volatility between $1501-$1512

·        At 8:30 AM, a confluence of information hit markets, causing gyrations and volatility. 

·        Gold sold off briefly to $1501, where if found support at yesterday’s low and ahead of $1499 (up trendline from 5/30 $1275 low) against stronger readings on US Core PCE (1.9% vs. exp. 1.7%) and Wholesale Inventories (0.4% vs. exp. 0.2%) and the Goods Trade Balance (-$72.8B vs. exp. -$73.4B). 

·        Weaker than expected readings on Jobless Claims (213k vs. exp. 211k) and Personal Consumption (4.6% vs. exp. 4.7%) combined with the release of the whistleblower’s complaint on Trump’s Ukraine call.  

·        Stocks sank through their open (S&P -10 to 2974), while the US 10-year bond yield fell to 1.68%. 

·        The DX retreated to 98.83, helped by a bounce in the euro to $1.0965 (ECB’s Lane says there is no recession and the risk of deflation is small), and gold rallied – taking out its overnight high to reach $1512.  

 

Gold retreats to $1506 on stronger Pending Home Sales

·        At 10 AM, a stronger than expected Pending Home Sales report (1.6% vs. exp. 1.0%) helped to pare losses in US equities (S&P -3 to 2981), while the 10-year yield edged up to 1.701%.  

·        The DX bounced to 99.07, and gold fell back to $1506.

 

Gold bounced to $1511 on fresh US-China trade concerns over Huawei waivers, Pelosi accusing Trump of cover up

·        Later in the morning, a report that the U.S. is unlikely to extend a temporary waiver that allows U.S. companies to sell supplies to Chinese telecom giant Huawei along with House Speaker Pelosi accusing Trump of a cover up sent US stocks further down (S&P -21 to 2963).  

·        Losses in the Energy, Communication Services and Health Care sectors led the decline, with a drop in oil (WTI to $55.40, 2-week low) contributing to the move. 

·        The 10-year yield slipped to 1.682%, but the DX firmed to its overnight high at 99.13– helped by a retreat in the euro ($1.0925). 

·        Gold was caught in the cross currents and traded in a choppy fashion between $1506 – $1511. 

 

Gold retreats to $1504-07 as US stocks trim losses

·        US stocks pared losses into the afternoon (S&P -8 to 2976), and the 10-year bond yield ticked up to 1.696%. 

·        The DX made a fresh intraday high at 99.17, and gold softened back to trade between $1504-07. 

                             

Futures volume and open interest

·        Open interest was off big – 25k contracts – reflecting a sizeable amount of long liquidation from yesterday’s selloff. 

·        Volume ballooned with 516k contracts trading. 

 

Looking ahead

All markets will continue to focus on geopolitical events (especially Brexit news and Saudi - Iran tensions, Hong Kong protests), developments with the Trump Administration (especially on US-China trade, potential legal / impeachment issues), oil prices, and will turn to reports tomorrow on Japan’s CPI, China’s Industrial Profits and Current Account Balance, Germany’s Import Prices, Eurozone’s Business Climate Indicator, Economic Confidence, Industrial Confidence and Services Confidence, US Durable Goods, Core PCE, Personal Income, Personal Spending, PCE Deflator, University of Michigan Sentiment, Baker Hughes Rig Count, Commitment of Traders, and comments from the Fed’s Harker and Quarles for near term guidance.

 

In the news: 

China’s August net gold imports via Hong Kong surge 60.8%:   https://www.reuters.com/article/china-gold-imports/chinas-august-net-gold-imports-via-hong-kong-surge-60-8-m-m-idUSL3N26H2D2?rpc=401&

WGC – takeaways from the Shenzhen Jewellery Fair:   https://www.gold.org/goldhub/gold-focus/2019/09/takeaways-shenzhen-jewellery-fair-2019

 

YTD Performance


12/31/2018
9/26/2019
Change
% Change
Gold


1282.5
1507
224.5
17.505%
DX


96.06
99.15
3.09
3.217%
S&P


2505
2983
478
19.082%
JYN


109.63
107.82
-1.81
-1.651%
Euro


1.1466
1.0925
-0.0541
-4.718%
US 10-year bond yield


2.69%
1.692%
-0.0099
-37.007%
Oil (WTI)


45.45
56.53
11.08
24.378%

 

 

Resistance levels: 

$1508 - 40-day moving average

$1510 – 20-day moving average

$1512 – 9/26 high

$1525 – options

$1535-36 – double top – 9/25 and 9/25 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:

$1501 – double bottom - 9/25 and 9/26 lows low

$1500 – psychological level, options

$1498 – 9/20 low

$1499– up trendline from 5/30 $1275 low

$1494-96 – double bottom – 9/16 and 9/17 lows

$1491– 50-day moving average

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

$1484 - 86 – 4 bottoms - 9/10, 9/11, 9/13, and 9/18 lows

$1480 – 8/13 low

$1472 – 8/7 low

$1457 – 8/6 low

$1450 – options

$1438 – 8/5 low