Precious Metals News Update - 28 May 2018

PRECIOUS METALS RANGES - Trade Date: May 25th

COMMENTS / HIGHLIGHTS:

• Gold stalled at technical resistance levels highlighted in Friday’s commentary and pared gains to close out last week ahead of long weekends today for the significant bullion trading centres of London and New York.

• Ructions on the political front in Europe have driven gold in EUR terms to 8 month highs. On the one hand, the avowedly anti-EU League and Five Star parties were unable to obtain the approval of President Mattarella to form a government, leading to the destabilising and disruptive prospect of a fresh round of elections. Elsewhere, Turkey is involved in a dispute with the US over the purchase of Lockheed Martin F-35 fighter planes with the European NATO member upsetting its trans-Atlantic partner with a decision to purchase the Russian S-400 air defence system. In addition, The Turkish President has called a snap election for June 24th.

• Speculators live for market volatility and has there ever been a US President who has generated more market volatility than President Trump? Having driven precious metals values higher towards the end of last week after  terminating the planned historic Summit meeting with North Korean Leader Kim Jong Un in Singapore on June 12th, over the weekend the US President re-kindled the spectre of the meeting going ahead as scheduled as he Tweeted that; “We are having very productive talks with North Korea about reinstating the Summit which, if it does happen, will likely remain in Singapore on the same date, June 12th., and, if necessary, will be extended beyond that date.” & “The Failing @nytimes quotes “a senior White House official,” who doesn’t exist, as saying “even if the meeting were reinstated, holding it on June 12 would be impossible, given the lack of time and the amount of planning needed.” WRONG AGAIN! Use real people, not phony sources.” And finally, “Our United States team has arrived in North Korea to make arrangements for the Summit between Kim Jong Un and myself. I truly believe North Korea has brilliant potential and will be a great economic and financial Nation one day. Kim Jong Un agrees with me on this. It will happen!” It was this final Tweet that saw gold gap lower on the open of Far Eastern trading on Monday.

• As previously noted, long weekends in both the US and the UK (US Memorial Day and UK Spring Bank Holiday) will significantly curtail market activity and liquidity in Europe and North America today.

TECHNICAL COMMENTS:

• XAU/USD:  A ding dong battle is being waged between bearish speculative interests in their attempt to break the support line which commenced on 16/12/16 at USD 1121.00 (and beneath which XAU/USD has yet to close), and bullish speculative interests attempting to defend the same support line and to regain the upper hand by pushing gold beyond formidable technical resistance in the form of the lower boundary of the sideways trading range that XAU/USD had been wedged between since the start of 2018 (USD 1306.00) & the conjunction of the 200 Day moving average (USD 1307.75). Only time will settle the matter one way or the other, but with the market liquidity being drastically affected by European and US holidays today, any surprise or significant moves should be viewed with a healthy dose of scepticism until everyone is back at their desk tomorrow.

• XAU/AUD: XAU/AUD continued its advance on Friday, following on from Thursday’s ‘Bullish engulfing’ candlestick on the Daily chart but halted at AUD 1730 (55 Day moving average) and has been driven lower in Far Eastern trade today back to various support levels between  AUD 1708 and 1712.

Good luck.
 
Regards,
Andre