Technical Analysis

PRECIOUS METALS RANGES - Trade Date: May 4th
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,”.

Softer US Treasury yields, a softer US Dollar and weaker US equities on concerns surrounding the ongoing trade negotiations between the United States and China, assisted early precious metals bargain hunters in keeping support under gold at a crucial technical level.

Precious metals firmed on modest shortcovering ahead of the anticipated US Federal Reserve monetary policy announcement. Prior to its release however, was the release of the private ADP national employment report (April) which came in +204K (vs +190K expected), to which the precious metals markets reacted with a yawn.

PRECIOUS METALS RANGES - Trade Date: May 1st
 
COMMENTS / HIGHLIGHTS:
 
Thin, illiquid markets resulting from May Day / Labour Day holidays spanning China and most of Europe, saw XAU/USD trade to its lowest level since Jan 2nd this year as the metal rendezvoused with the technically all-important 200 Day moving average at USD 1305.

PRECIOUS METALS RANGES - Trade Date: April 27th
 
COMMENTS / HIGHLIGHTS:
 
Asian markets were the first to receive the breaking news on Friday that (following on from news a week earlier that the DPRK would discontinue nuclear and ICBM testing), the 1953 armistice between North and South Korea had been formalised into a peace treaty, the result of a meeting between the DPRK’s Leader Kim Jong Un and South Korean President Moon-Jae. The occasion of the first ever visit to South Korea by a leader from North Korea also resulted in statements of intent aimed at reducing nuclear weapons to zero on the Korean peninsula and the re-uniting of families divided by the border.
The remainder of trade on Friday was largely routine, gold firming during the US session on some end of week booksquaring after a better-than-expected result for the advance 1st Quarter GDP data (+2.3% actual vs +1.8% expected). Rumours also swirled about on Friday that the Trump Administration has its sights set on a trade war with the European Union.

PRECIOUS METALS RANGES - Trade Date: April 26th
 
COMMENTS / HIGHLIGHTS:
 
US 10 Yr Treasuries continued to lead gold by the nose, as yields at first rose above 3% before retreating on Thursday which triggered commensurate moves in the US Dollar and US equities.

US 10 Yr Treasury yields nudged 3% overnight, propelling the US Dollar Index higher again which weighed upon US equities and precious metals values.

News from the US Treasury that sanctions relief would be provided to Rusal (the world’s largest aluminium producer ex-China) on condition of a restructuring of its ownership (whom the sanctions were targeted at), triggered a Skylab-esque reversion to the averages by the white metals, palladium in particular.

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.

A spike in US Treasury yields overnight on increasing expectations of a fourth interest rate hike by the US central bank in 2018, lent support to the Greenback, drove US equities lower and precious metals gains (in USD terms) accrued earlier during Far Eastern and European trade, were pared by the close of business in NY.

A sterling performance from silver saw the white metal marginally edge out palladium as the star performer from amongst the precious metals complex on the day, as sanctions against the Russian Federation continue to underpin palladium in particular (debatable whether this had any bearing on silver’s surge on Wednesday, however).

Silver’s outperformance relative to gold swatted the gold/silver ratio lower.

Gold and silver were buffeted around within recent ranges predominantly on headline risk. Weakness during the Far Eastern and European sessions was largely reversed by the US close however, as dip buyers swooped and scooped.

Precious metals were sent lower at the open of Far Eastern trading on Monday on a “buy the rumour, sell the fact” reaction, after a coalition comprising France, the UK and the US (FUKUS), delivered a precisely targeted military spanking to Syrian President Bashar al-Assad (after the close of trading in Friday). The Syrian President, who stands right on the cusp of victory against ISIS terrorists within his country, allegedly carried out a chemical weapons attack against his own people, drawing the ire of the “international community” and a shower of 101 Tomahawk Cruise missiles. No deaths or injuries were reported. And the Russian Federation stayed its hand.

Ladders and snakes – ladders give, snakes take. Gold and silver gave up the entirety (and a touch more) of Wednesday’s gains yesterday, as expectations of the US and its allies raining down a shower of missiles from the skies over Syria, failed to materialise. The slightly inconvenient requirement for facts and evidence to emerge before pursuing such a grave course of action, perhaps staying the hand of the war hawks for now. That notwithstanding, the United States, the UK and France continue to assemble their military hardware in the region as President Trump pursues his “Twitter Diplomacy”, Tweeting overnight that; “Never said when an attack on Syria would take place. Could be very soon or not so soon at all! In any event, the United States, under my Administration, has done a great job of ridding the region of ISIS. Where is our “Thank you America?”

Safe haven buying on the back of unfolding developments from the Middle East had kept a steady bid tone to the precious metals throughout Asian and European trading as expectations mounted of military action in response to recent alleged events in Syria.  It was an early morning (US) Tweet from US President Trump however, that lit the wick under gold and silver, propelling them towards significant technical resistance levels.

When the newswires carried comments from Chinese President Xi Jinping during the early part of Far Eastern trading that China was prepared to lower tariffs on motor vehicles and motor vehicle related products, in addition to lowering foreign ownership restrictions - effectively dissipating the heat out from the recent trade war rhetoric, stock futures rallied, the AUD rallied hard against the Greenback, XAU/USD drifted lower and XAU/AUD was crushed from AUD 1737 down to AUD 1725 in quick time.

Hello everyone.
 
COMMENTS / HIGHLIGHTS:

• Markets were driven hither and yon in thin Far Eastern trade on Friday (Shanghai closed for the Tomb Sweeping public holiday) as US President Trump continued aggressively pursuing policies intended to redress the United States’ $500 billion trade deficit with China, this time in the form of firing additional trade war salvos (“In light of China’s unfair retaliation, I have instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs”)

• The Greenback and US equity indexes weakened on the back of the news, while precious metals marched higher.

• Gains were quickly pared as end-of-week position squaring and profit taking commenced from the middle of the Far Eastern trading session right up until the all-important US Bureau of Labor Statistics’ employment data release for March.

Gold takes support from the Weekly Ichimoku Standard Line (US$1301) but has yet to overcome the important US$1366 level. Protectionism is the theme for gold’s current strength after Chinese retaliation over 128 mainly agricultural imports from the US.

Targets: medium term look for US$1382 still, then US$1389 basis shorter-term point and Figure targets. A break of the recent highs also suggests US$1410-1420 basis the sideways trading seen since the end of January. Above, US$1360, recent downside targets will disappear.

The Australian Bureau of Statistics yesterday released its latest housing statistics, which showed that, nationwide, property prices rose by 1% in the final quarter of 2017.

After hitting the US$1361 target, gold tested the US$1301 support at the Weekly Standard line on the Ichimoku/the base of the Daily cloud, and recovers.

Targets: medium term look for US$1372. Short term the market is vulnerable to weaken off to US$1300 again.

Support comes in at US$1301 from the weekly Ichimoku Standard Line. Resistance lies at US$1332-34 and US$1366.

CME positioning reveals another decline in gross Managed Money length of almost 0.50 million Ftozs. Shorts reduced by 0.57 million. Trading in the week of the 27th February to the 6th of March took place at a VWAP of US$1321.64, and since the 6th, open interest in the April and June contracts has contracted by about 1.85 million FTozs, suggesting more long liquidation took place.

Hello everyone,
 
Where to begin?
 
Markets have been roiled over the past few days by a handful of events but arguably the one causing the most consternation amongst investors being the announcement last Friday by President Trump of his intention to apply across the board tariffs of 25% on imported steel and 10% on imported aluminium on the grounds of ‘national security’.  Appeals from US allies and from some members within his Administration to desist, as well as threats of retaliation from some trading partners (the EU) and the attendant hue and cry of “Trade Wars” from the usual suspects in the media, somewhat belie the fact that US interests are already subject to tariffs in various jurisdictions (e.g. the European Union applies a 10% tariff to US vehicles vs the 2.5% tariff applied to European automobiles imported into the USA). All this notwithstanding, the “Trade Wars / Tariffs” issue claimed its first scalp today with the announcement this morning at the commencement of trading in the Far East that President Trump’s senior economic adviser, Gary Cohn has handed in his resignation and is to leave the White House (Mr Cohn unable to reconcile his avowedly anti-protectionist views with the US President’s ‘America First’ agenda).

Hello everyone.
 
The markets’ verdict on the prepared Testimony and subsequent Q&A of US Federal Reserve Chairman Jerome Powell before the House Financial Services Committee, came down on the side of “hawkish”.

​Hello everyone.
 
Precious metals commenced the week with price action driven by the US dollar which itself was hoofed around like a football, initially on comments from Bank of Japan Governor Kuroda during early Far Eastern trading that the: “BOJ will persistently continue powerful monetary easing” and “Japan's economy needs persistent monetary easing” and then by comments during European trading from European Central Bank President Draghi that "there's no currency wars".

​Chinese New Year and US Presidents Day holidays have impacted market liquidity during the early part of this week.

The return of US investors on Tuesday saw the precious metals driven lower and in the absence of anything significant of note to canvas, I’ll let the pictures tell the tale as follows:

1. Stronger US Dollar Index as the Greenback rallied against its major pairs

2. Firm US 10 Year Treasury yields

3. Stronger US Dollar / Weaker Euro

4. Stronger US Dollar / Weaker JPY

5. Lower DJIA

6. Lower XAU in USD
   & 7) Lower XAU in AUD

Hello everyone.
 
Since the last missive a week ago, extremely choppy ‘rinse and spin’ price action has been seen across the precious metals complex (particularly gold), as investors were driven hither and yon by volatility across US equity markets.
 
Yesterday proved no exception.