Technical Analysis

Gold positive on continued easy—money policies, range-bound within daily Ichimoku Cloud. MM longs reduced to 21.832 million,. Support at US$1446 and US$1,412. Above S$1,477 gold looks as if it can move back towards recent highs.

Gold made a high in September of US$1,557.11, before a trio of weeks where the price closed near the lows.  The Managed Money long position declined by 9.7% in the week of 03-10 September (2.57 million FTozs), the largest percentage decline since May of this year, with longs taking profit as the price drew close to the top of the apparent flag pattern, and perhaps as the negative-yielding bonds / ever lower natural interest rate narrative grew somewhat stale. Indeed, the value of negative-yielding debt, which peaked at 17.037 trillion US$ on the 29th of August, declined 19% to 13.842 trillion US$ by Monday the 16th of September.

Gold had an explosive move since the last report, hitting US$1,535. John Williams, the President of the New York Fed commented on the 19th of July that central banks need to take ‘swift action’ when near the Zero Lower Bound, which helped form the perception that the interest-rate cycle will continue to be accommodative. Williams is the co-author of a 2000 paper that promotes a modified Taylor rule with a forward-looking adjustment that pushes the policy rate lower faster, and a backward-looking adjustment that would rates lower for longer.

After breaking out of the rectangle pattern, gold quickly hit the expected target, overshooting by about 4-5 US$. Subsequent to that move, gold is consolidating, but looks like resolving higher with targets shown in the report. Although the Non-Farm Payrolls were high at 224,000 on July 5th, average hourly earnings remained weak and the unemployment rate crept slightly higher (from the lows…) so there was no change to the expected rate cut in July.

Finding support repeatedly at the August-February 38.20% Fibonacci retracement or thereabouts, (US$1,276-ish) gold rallied hard to test the 2018 high by the 14th of June. Although a fresh high was made, the 2018 highs proved insurmountable, and gold finished the week right where it opened – in uncertain price action.

Gold declined to test the key support at the Weekly Cloud top, with the lows getting within 3 US$ of that support level twice before rebounding. The price closed right on the 38.20% Fibonacci retracement of the August 2018-February upswing and overall the sense of a consolidation turned the mood back towards bullishness by the beginning of May. The subsequent decline in the SPX index helped support the case for gold, as the US-China trade dispute dusts itself off and regains strength.

​Late March and early April turned to be bearish with gold unable to challenge the closing levels of March and April of 2018, followed by a rapid break-down in the price, as fund flows left gold and US equities continued to climb. Gold experienced an almost 13% drop in Managed Money length on the CME, with markets viewing recent data as much more positive for the world economy and with greater confidence around US-China trade talks.

After retracing from the February highs to test the 38.20 retracement of the September-February rally, a level below which gold could not close, the price has recovered to emerge from the Daily Ichimoku Cloud and targets US$1329 (achieved overnight) and then US$1341.

The rally continues, helped along by some weak US retail sales data that supports the case for the pause in Fed tightening. Overnight, President Trump’s comments about the CNY sparked a move above the January highs.

One consequence of the US government shut-down is that the CFTC reports that I so love to bore on about have been suspended, so you can avoid that at least for this month.
Gold has experienced a sharp rally that has become mired in technical resistance at the Weekly Cloud and the 61.80% retracement of the April-August down move.

Gold has experienced a sustained period of short-covering as Managed Money shorts on the CME unwound 4.95 million FTozs in the month since November the 13th, a process which has taken gold above the important US$1238-1240 level and almost halved the size of the short bet against gold since August the 21st. The price has broken above previous highs and above the important retracements mentioned previously that had acted to cap the previous rally.

PRECIOUS METALS RANGES - Trade Date: November 16th
COMMENTS / HIGHLIGHTS: Gold remained bid on Friday, driven largely by UK PM May’s self-inflicted Brexit chaos and some ‘dovish’ comments from US Federal Reserve Bank officials.There is no point mincing words here. It is impossible to conceive a more antithetical outcome to the verdict delivered and desired by British voters in the June 2016 referendum, which was to leave the European Union and to regain its sovereignty by returning control of its law making and borders to its parliament (and adjudication on said laws to its own courts), than the 585 page capitulation aka the ‘Withdrawal Agreement’, served up by the British PM and her civil service to the UK Parliament last week

Gold’s rally failed to close above the 38.20% retracement of the whole April-August price drop and came to a stop right at the Weekly Standard Line (US$1243.20) before dropping sharply to the Weekly Turning Line at US$ 1212.19, where the price found initial support, enabling a rebound before touching the US$ 1207 level just before Armistice Day.

PRECIOUS METALS RANGES: Trade Date - November 13th
COMMENTS / HIGHLIGHTS: A strong US dollar (with the US Dollar Index touching one and a half year highs on Monday) has weighed like an anchor upon precious metals values over the past week, especially since last week’s “hawkish” FOMC monetary policy announcement by the US Federal Reserve all but spelt out to investors that US interest rates are destined for an upward trajectory.

PRECIOUS METALS RANGES: Trade Date- November 8th 
COMMENTS/HIGHLIGHTS: With the US mid-term elections done and dusted, investor focus returned to the latest MonPol announcement from the US Federal Reserve’s FOMC on Thursday. Prior to that however, the precious metals had adopted a softer tone after Initial Weekly U.S. Jobless claims fell by 1K to 214K (seasonally adjusted).

PRECIOUS METALS RANGES: Trade Date- November 1st
 COMMENTS:  XAU/AUD continued its retreat down to near the AUD 1706.25 level (noted in Wednesday’s technical) and whilst XAU/USD ripped higher yesterday, the Aussie dollar also surged, which kept XAU/AUD from rebounding away from recent lows.

PRECIOUS METALS RANGES: Trade Date- October 30th
COMMENTS: Support at $1730.00 proved ephemeral yesterday as XAU/AUD gathered downside momentum and retreated to within range of its 21 Day moving average at $1715.00.

PRECIOUS METALS RANGES: Trade Date- October 25th 
COMMENTS: XAU/USD continues to baulk ahead of the USD 1238.65 level (the 38.2% Fibonacci retracement of the USD 1365.40 to 1160.25 move) but remains within striking distance near the top end of its newly established sideways trading range between there and previous major resistance at 1214.85 (which is now acting as support).

PRECIOUS METALS RANGES: Trade Date- October 22nd
 COMMENTS: Since breaking out of its old sideways trading range on October 11th, XAU/USD has settled into a new (higher) sideways trading band between USD 1238.65 (the 38.2% Fibonacci retracement of the USD 1365.40 to 1160.25 move) and previous major resistance at 1214.85 which is now acting as support.

Gold remained very rangebound until the 11th of October, when the market reacted strongly to weakness in US equity markets and rallied sharply. The price action since suggests weakness back to US$1214, which if supported should help provide a platform for a further move higher. The Managed Money shorts reduced their bets by 25 pct in the week ending Tuesday the 16th of October, which spells a powerful change in sentiment towards gold.

PRECIOUS METALS RANGES: Trade Date- October 18th 
COMMENTS: XAU/USD continues consolidating between the 38.2% Fibonacci retracement at USD 1238.65 and previous major resistance at 1214.85 which is now acting as support. Potential pullbacks as deep as USD 1200.00 would not cause any significant technical damage to the favoured bullish outlook for XAU/USD.

PRECIOUS METALS RANGES: Trade Date- October 17th 
COMMENTS: XAU/USD continues with consolidation type price-action between the 38.2% Fibonacci retracement at USD 1238.65 and previous major resistance at 1214.85 which is now acting as support. Potential pullbacks as deep as USD 1200.00 would not cause any significant technical damage to the favoured bullish outlook for XAU/USD.

PRECIOUS METALS RANGES: Trade Date- October 16th
COMMENTS: Consolidation for XAU/USD as the recent advance hesitates around the 100 Day moving average and the 38.2% Fibonacci retracement at USD 1238.65 with previous major resistance at 1214.85 now acting as support.

PRECIOUS METALS RANGES: Trade date- October 14th 
COMMENTS: Since the last technical note on Oct 5th, XAU/AUD ticked has ticked all the price-action boxes. Specifically, “Expect any pullbacks on mean reversion or profit taking to be well supported at the AUD 1679 - 1687 level.” - tick.

PRECIOUS METALS RANGES- Trade date: October 4th
COMMENT: The market remains trapped within the broader sideways trading range between the Aug 24th low at USD 1183.20 and the Aug 28th high at USD 1214.85 but is progressing into an ever-decreasing triangular congestion zone bounded by USD 1183.20 and the downtrend resistance line.