Precious Metals News Update - 7 May 2018

07 May 2018

COMMENTS / HIGHLIGHTS:

Gold stayed away from its week’s lows on Friday after the eagerly awaited US Bureau of Labor Statistics April employment data came in softer than anticipated by the market at +164K jobs for the headline Non-Farm Payrolls figure (vs +192K expected) with the Unemployment Rate registering 3.9% (vs 4.0% expected). With February’s data being revised down marginally and the March data being revised higher, the BLS report noted that ”job gains have averaged 208,000 over the last 3 months,”.

The slightly optimistic tone carried via comments last week at the completion of day one of the US-China trade negotiations, were somewhat dampened by the conclusion of the US delegation’s visit with Chinese negotiators saying that some agreements had been made but “significant disagreements over certain issues” remained and that negotiations would be ongoing.

The May 12th deadline approaches for the renewal of sanctions waivers in relation to the Joint Comprehensive Plan of Action (JCPOA) agreed with Iran that was signed in 2015. President Trump is widely anticipated to abandon the deal which has led to a ramping up of rhetoric from the Iranian Republic. Specifically, comments have emanated from Iran that "If the United States leaves the JCPOA, you will soon see the historic regret which the move will bring about for Washington", and “Orders have been issued to our atomic energy organization ... and to the economic sector to confront America’s plots against our country,”. This is disconcerting on a couple of fronts. First is the impact on the crude oil market. The easing of sanctions allowed Iran to re-enter the crude market as a supplier. Crude prices are higher in part due to the market factoring in the removal of this supply should the deal collapse as anticipated. Additionally, any hint of Iran’s nuclear obligations becoming untethered due to the collapse of the deal, has had Israel warning of a defensive military strike.

TECHNICAL COMMENTS:

XAU/USD: XAU/USD stayed away from last Tuesday and Wednesday’s lows on Friday, lending additional weight to the robustness of support at the lower end of the sideways trading band (USD 1300 / 1305) that it has been contained between since the start of the year. (**Today’s / the most recent candlestick displayed on the attached chart, which shows an open just beneath USD 1300.00 is bad tick data and should be disregarded**).

XAU/AUD: XAU/AUD remains trapped within its narrow sideways range between its 21 Day moving average (AUD 1740.00) and topside resistance in the AUD 1752.00 / 1757.00 zone and only a significant close through the upper boundary will signal that XAU/AUD has broken out.

Good luck.

Regards,
Andre