Gold Traders’ Report - September 27, 2019

 
SEP 27, 2019

Gold Recovers to $1502 After Earlier Sharp Selloff to $1487 - Gold Today September 27, 2019

Jim Pogoda, Senior Gold Trader, Gold Bullion International


Overnight – gold tumbles to $1491 against upbeat comments from China on US-Sino trade prospects, Saudi ceasefire in Yemen

·        Gold traded lower last night, sliding in a range of $1507 - $1491.

·        It edged up to its $1507 high during Asian hours against a modest pullback in S&P futures (-8 to 2972) and a slight softening in the US dollar (DX to 99.14). 

·        The yellow metal tumbled during European time, tripping stops below key support at $1502 (up trendline from 5/30 $1275 low) and then $1501 (double bottom - 9/25 and 9/26 lows), $1500 (psychological level, options), $1498 (9/20 low) to reach $1491.

·        Gold was pressured by a rebound in S&P futures (+12 to 2992) and a move higher in the US 10-year bond yield (1.687% - 1.725%). 

·        Stocks were lifted by positive comments from Chinese Foreign Minister Wang Yi (hopes for continued momentum after recent goodwill gestures, talks can progress if both sides are proactive, with talks set to resume Oct 10-11 in Washington), along with the Saudis announcing a partial ceasefire in Yemen (WTI oil plunged from $56.61 - $55.57). 

·        A rebound in the DX (99.31 – 3 week high) during early European was also a headwind for gold, lifted by weakness in the pound ($1.2335 - $1.2271, BOE’s Saunders says next move could be a rate cut even if no-deal Brexit is avoided) and the euro ($1.0923 - $1.0907, fresh 28-month low, weak German Import Prices). 

·        However, gold clawed back to $1495 ahead of the NY open as the DX retreated to 99.13.  The greenback was weighed by a bounce in the pound ($1.2320, UK’s Sharma cautiously optimistic on a Brexit deal BS) and the euro ($1.0940, stronger Eurozone Services Confidence).

 

Gold recovers to $1497 on softer US eco data

·        At 8:30 AM, worse than expected readings on US Personal Spending (0.1% vs. exp. 0.3%) Core PCE (0.1% vs. exp. 0.2%), and Capital Goods Orders Nondefense Ex Aircraft (-0.2% vs. exp. 0) outweighed a stronger report on Durable Goods (0.2% vs. exp. -1.1%).  

·        S&P futures slipped (+6 to 2986), and the 10-year bond yield fell to 1.694%. 

·        The DX continued to decline (99.06), and gold continued to recover, reaching $1497.

 

Firmer opening in US stocks send gold to $1487 – 1 week low

·        US stocks opened firmer (S&P +11 to 2988), helped by a stronger than expected reading on the University of Michigan Consumer Sentiment Report (93.2 vs. exp. 92.1). 

·        Gains in the Financials and Energy sectors led the gain, and a rebound in oil (WTI from $54.77 - $56.40, Trump denies Iran’s claim that the US offered to remove sanctions for negotiations) aided the move.  

·        The 10-year yield ticked up to 1.701% while the DX turned up to 99.21. 

·        Gold turned lower and took out support at the overnight low and $1489 (9/19 low) to reach $1487 – a one week low. 

 

Report that the US is considering limits to investments in China crushes stocks and  lifts gold back up to $1502

·        Around mid-day, a report that the Trump Administration was deliberating a block on all US investments in China sent US stocks sharply lower (S&P -23 to 2954) into the afternoon

·        The 10-year yield fell to 1.682%, and the DX sank to 98.98. 

·        Gold snapped higher, tripping some short covering up to $1502 – the key technical support level which was breached earlier this AM (up trendline from 5/30 $1275 low)

 

Futures volume and open interest

·        Open interest was off 2.2k contracts, showing a net combination of long liquidation and some short covering from yesterday.

·        Volume was much lower but still very robust with 412k 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 this afternoon’s Commitment of Traders Report followed by reports Monday on Japan’s Retail Sales, Industrial Production, Construction Orders, Housing Starts, China’s PMIs, Germany’s Retail Sales, Unemployment Change, and CPI, UK House Price Index, Consumer Credit, GDP, Eurozone Unemployment Rate, US Chicago PMI, and the Dallas Fed’s Manufacturing Activity Index for near term direction. 

 

In the news:

BAML – precious metals net second biggest weekly inflows on record:   https://uk.reuters.com/article/markets-funds-baml/precious-metals-net-second-biggest-weekly-inflows-on-record-baml-idUKL9N26F02X?rpc=401&

WGC – 20 years of the Central Bank Gold Agreement comes to an end today:   https://www.gold.org/goldhub/gold-focus/2019/09/twenty-years-central-bank-gold-agreement-comes-end-today

WGC – gold rally sours Indian demand:   https://www.gold.org/goldhub/gold-focus/2019/09/gold-rally-sours-indian-demand-august

 

YTD Performance


12/31/2018
9/27/2019
Change
% Change
Gold


1282.5
1499
216.5
16.881%
DX


96.06
99.12
3.06
3.186%
S&P


2505
2956
451
18.004%
JYN


109.63
107.88
-1.75
-1.596%
Euro


1.1466
1.0941
-0.0525
-4.579%
US 10-year bond yield


2.69%
1.694%
-0.0099
-36.932%
Oil (WTI)


45.45
55.51
10.06
22.134%

 

 

Resistance levels: 

$1507 – 9/27 high

$1510 - 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:

$1502– up trendline from 5/30 $1275 low

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

$1500 – psychological level, options

$1498 – 9/20 low

$1493– 50-day moving average

$1489 – 9/19 low

$1487 – 9/27 low

$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