Gold News Update - 3 July 2018

02 July 2018

COMMENTS / HIGHLIGHTS:

Like the fictional gorilla, King Dollar remained rampant and weighed the precious metals complex down as it drove XAU/USD to its lowest level since mid-December 2017. Safe-haven buying on the back of uncertainty surrounding the impact of the US President Trump’s “trade war” policy, political brinkmanship in Germany stemming from the immigration issue (which had placed the Euro under pressure), and robust economic and sentiment data from the US have all underpinned the Greenback’s strength recently.

The US government’s $34 billion in trade tariffs on Chinese exports are scheduled to go into effect imminently. Additionally, the US President announced new tariffs on European cars (drawing a retaliatory response from the European Union who plans to impose its own $300 billion worth of tariffs on the US), which may go some way to explaining platinum being crushed to its lowest level since mid-December 2008 in USD terms - platinum being used significantly in the auto-catalyst industry.

In a holiday affected week (the US observes its July 4th Independence Day holiday on Wednesday), there remain some market-significant events which include Thursday’s release of the Minutes from the latest US FOMC meeting, followed on Friday by the always-important US Bureau of Labor Statistics employment data for June, with market consensus for the headline Non-Farm Payrolls figure coming in at +195K and the Unemployment Rate anticipated at 3.8%

TECHNICAL COMMENTS:

XAU/USD: Since last commenting on the technical outlook for XAU/USD a few weeks back and highlighting the significance of the close below major trendline support for the first time since 16/12/16 and the break of the May 21st low at USD 1282.00, leaving little by way of technical support until the low at USD 1236.50 (registered on 12/12/17), XAU/USD’s succession of lower highs / lower lows has seen it journey untramelled towards the USD 1236.50 level, registering a low yesterday at USD 1240.00. Notwithstanding a significant unwind in net speculative long positioning, USD 1236.50 represents a bit of a technical ‘high-noon’ for gold which if left undefended by bullish speculative interests, could see a quick unravelling down towards psychological big-figure support at USD 1200 and the low seen this time last year at USD 1204.50.

XAU/AUD: XAU/AUD presently flirts with its technically significant 200 Day moving average at AUD 1692.00. A break would open the way to the mid-March low at AUD 1670 and late January lows at AUD 1652.00.

Good luck.

Regards,
Andre