Precious Metals News Update - 23 April 2018

PRECIOUS METALS RANGES - Trade Date: April 20th

COMMENTS / HIGHLIGHTS:

• US Treasury yields continued firming on Friday as President Trump Tweeted about Russia, China (currency manipulation and trade skulduggery), amongst other things. The US Dollar Index firmed, US equities were sent lower and precious metals values (in USD terms) slid as end-of-week book-squaring also kicked in.

• Also on Friday, DPRK Leader Kim Jong Un announced via the state run Korean Central News Agency that effective immediately, North Korea would discontinue nuclear and ICBM testing and “discard” its nuclear test centre. The announcement came ahead of a planned May or June summit between the US President and the North Korean leader - the first between any leaders of the two countries since 1948.

• Whilst the announcement was well received by the US President, the Administration indicated its unwillingness to budge on punitive actions (sanctions) prior to a commitment by the DPRK to full denuclearization.

• Turkish President Recep Erdoğan announced his intention to have all his country’s gold reserves held at the US Federal Reserve, repatriated, in an attempt to wean Turkey off its reliance on the Greenback. Turkey is the 11th largest gold holder according to the IMF with reserves estimated at 591 tons.

• Commerzbank in a daily missive on Friday made the following noteworthy observations: - (i) Thursday “saw inflows into the gold ETFs for the twelfth consecutive day. Holdings have been increased by 45 tons since the start of the month” & (ii) (in relation to palladium’s recent surge) “We do not envisage palladium being affected by any sanctions because the US would shoot itself in the foot by doing so. According to data from the US Geological Survey, the US sourced over 37% or a good 29 tons of its palladium imports from Russia last year. The palladium is needed mainly in the automotive industry, where it is used to manufacture autocatalysts. Given that Metals Focus data show that the US produced only just shy of 13 tons of palladium itself last year, it is not likely to be all that easy to find an alternative source for the Russian material.”

TECHNICAL COMMENTS:

• XAU/USD: XAU/USD moved below recent support at the 21 Day moving average (1339.50), halting just above its 55 Day moving average on Friday (USD 1332) and at the lower end of its support level (USD 1335/1340). There is some minor trendline / moving average technical support at the USD 1332 level, a break beneath which opens the way back to USD 1320.

• XAU/AUD: A marginally higher high on Friday saw XAU/AUD remain moribund within its recent sideways trading range and with little to suggest from a technical perspective.

• XAG/USD: XAG/USD dropped back beneath significant trendline resistance (going back to July 2016) at the USD 17.20 level and it now remains to be seen whether the white metal can regather its recent topside momentum before setting its sights on the end of Jan high at USD 17.70 and the early September 2017 high at USD 18.22

• XPD/USD: A Doji candlestick posted on Friday reflects continuing market indecision at present levels.

• XAU/XAG Ratio: The significant technical support line at 78.44 which had been in place since the beginning of March last year but was broken last week, is now acting as technical resistance and the 76.50 - 77.00 region remains in play.

Good luck.
 
Regards,
Andre