Technical Analysis

Good morning everyone and Happy Friday.

US equity markets were bludgeoned lower on Thursday as President Trump disbanded his council of economic advisors consisting of the CEO’s of many of the nation’s largest corporations, many of whom decided to hand in their resignations from the council following the President’s response to last weekend’s events in Charlottesville, Virginia. The USA is currently a nation riven by political and racial division to an extent not experienced in an exceptionally long time and this turbulence as well as another tragic event in Spain (which to all intents and purposes appears to be a terrorist incident), are likely feeding the ‘bid’ tone across the precious metals complex at present. Additionally, as noted earlier in the week, the Korean peninsula, the Middle East, Iran, Venezuela and Russia all remain US foreign policy flashpoints.

Good morning everyone.
 
A mixed day for gold on Wednesday, the precious metal closed higher in XAU/USD terms but remained under pressure in XAU/AUD terms as the major currency pairs (EUR, JPY, AUD) saw the Greenback weaken due to the release of ‘dovish’ minutes from the most recent meeting of the US central bank’s Federal Open Market Committee. Divergent opinions from committee members regarding the timing of future interest rate increases were also evident.

Good morning everyone,
 
Precious metals activity yesterday followed in much the same vein as Monday. That being, that as the US Administration and North Korea took their recent thermonuclear war rhetoric down a notch, investors were enticed back to the ‘risk on’ trade, driving US equities back towards record highs and propelling the US Dollar Index higher as the Greenback strengthened across all the major pairs (EUR, JPY, AUD). This consequently led to softer precious metals values as the major cause of the latest advance (i.e. geopolitical heat), received less prominence and fed a continuation of profit taking and speculative long liquidation in the metals.

Good morning everyone.
 
Range trading / consolidatory type price action characterised trading in gold and silver to commence the week, as a rebound in the US Dollar Index and US equities, as well as a modest dialling down of the bellicose rhetoric between the US administration and North Korea triggered profit taking and modest long liquidation but which also provided investors with a dip-buying opportunity.

Good morning everyone and I trust you had a good weekend.
 
Geopolitical ‘chaos’ underpinned the advance across the precious metals complex last week forcing investors to flick the switch from ‘risk on’ to ‘risk off’ and to decamp to safe haven assets. The white-hot rhetoric between the US Administration and Pyongyang has received saturation coverage in the media so there is no need for reiteration in this commentary.
 
Perhaps not surprisingly, some of the gains were pared on end-of-week booksquaring and profit-taking.

Good morning everyone and I trust you had a good weekend.
 
The long and short of trading on Friday was that gold and silver had the wind knocked out of their sails somewhat as the week concluded, when much better than expected employment data from the US Bureau of Labor Statistics hit the wires. The headline Non-Farm Payrolls figure for July came in at +209,000 jobs added (vs +180,000 expected) with the Unemployment Rate falling to 4.3% as expected (vs 4.4% the previous month).
 
Not surprisingly the Greenback surged against the majors (EUR, JPY, AUD), driving the US Dollar Index higher. The Dow Jones Index also continued advancing to record highs. Consequently, precious metals were driven lower - arguably a necessary speculative rebalancing in view of the latest CFTC Commitments of Traders Report (as at August 1st) which showed a significant surge back to the long side by non-commercial accounts.

Good morning everyone,
 
Thursday saw range-driven trading in gold ahead of Friday’s US Bureau of Labor Statistics employment data release. Market consensus for the headline Non-Farm Payrolls figure anticipates the addition of 180,000 jobs for July, while the Unemployment Rate consensus is for a figure of 4.3% (4.4% was the prior month).
 
Other economic data releases out of the US overnight were mixed. U.S. Markit Service PMI (July) (final) rose to 54.7 (vs 54.2 expected & 54.2 in Jun), U.S. Factory Orders (Jun) were +3.0% (vs +2.7% expected & positive revised -0.3% in May) and U.S. Services ISM Index (July) fell to 53.9 (vs 57.0 expected & 57.4 in Jun).

Good morning everyone.
 
Choppy / volatile trade was seen on Tuesday with the USD fluctuations the main driver.
 
During Far Eastern trading, XAU/AUD was under early pressure but erased the entirety of its losses after the Reserve Bank of Australia left interest rates unchanged which initially sent the AUD/USD lower, but this too was quickly reversed. XAU/AUD continued its advance during US trading as soft economic data from the US led investors to continue seeking alternatives to the US Dollar for the time being.

Good morning everyone and we return to normal service here after a short break.
 
Month-end and XAU/AUD closed on a firm footing as the Greenback hit its lowest level against the EUR in 2&1/2 years.
 
Who needs Game of Thrones or Reality TV when head-spinning developments seemingly come thick and fast from the Trump Administration? In the latest instance, the swearing in of President Trump’s new Chief of Staff General John Kelly on Monday led to the instant removal of the President’s freshly appointed Communications Director, Anthony Scaramucci - 11 days into his new role to be precise.

Gold
Gold has had a powerful recovery through the last three weeks of July as the price held technical support at US$1208 level, dipping below very briefly before a surge of physical demand sent the price higher again to make a high at US$1271.20 so far.
 
The main driver of performance was a the USD index (the DXY) plunging through trend line support at the end of June, opening the month at 95.65 and sinking to 93.15, with what looks like critical support at these levels. Look for the DXY to sink to 91.30 if support at current levels fails, further helping gold.
 
Dollar weakness stems from two issues – insufficient evidence to support strong tightening in US rates, with weak inflation numbers and a dovish announcement from the Federal Reserve that continues to play its cards close to its chest, but chose to highlight the fact that inflation continues to grind on below the Fed’s target level. The second issue is that the US President and his immediate family and some officials continue to be mired in allegations over collusion with Russia pre-election, and an inability to deliver on legislation. The failure to repeal ‘Obamacare’ is now eating into other deliverables, like tax reform and reduction, which is where American prosperity will really be determined.

Good morning everyone.
 
Friday’s weak US CPI (+1.6% Y-oY) & Retail Sales data releases saw XAU/USD finally reclaim the technically significant 200 Day moving average, as price weakness from the first week of June to the first week of July culminated.
 
US dollar weakness and a retreat in US Treasury yields was consequently seen, helping to bolster XAU/USD as various Fed officials began to walk back rate hike rhetoric in relation to the September and December meetings of the FOMC. For the moment, gold ETF’s have not benefited with outflows continuing.

Good morning everyone and I trust you enjoyed your weekend.
 
We are running a little lean here this week, so apologies for the morning wrap coming through as a midday wrap today (and possibly for the remainder of the week) but better late than never!
 
In a nutshell, precious metals were placed on the backfoot on Friday after another round of strong employment data from the US. The headline Non-Farm Payrolls figure showed that 222,000 jobs were added and that the unemployment rate increased from 4.3% to 4.4% (vs (+177K & 4.3% expected respectively). The May payrolls number was revised upwards from 138K to 152K and April was also revised upwards from 174K to 207K. A total +47K jobs more than previously reported.

Good morning everyone and happy Friday!
 
A good day for range-traders as the precious metals chopped around / consolidated on Thursday, managing to retain the bulk of recent gains by the close of business in New York.
 
XAU/AUD moved freely between AUD 1608 - 1616 while 1222 - 1230 was the range seen in XAU/USD.
 
Mixed economic data out from the US overnight on balance was beneficial for precious metals.

Good morning everyone.
 
As noted in Tuesdays commentary, geopolitical developments can change market sentiment rapidly and with the newswires broadcasting the following headlines during pre-market trading on Wednesday morning in Asia -
 
*U.S. WILL BRING N.KOREA'S ACTION BEFORE UN SECURITY COUNCIL
*U.S. SAYS NORTH KOREA TESTED AN ICBM; REPRESENTS ESCALATION
*N. KOREA KIM: U.S. WON'T LIKE `GIFT' ON INDEPENDENCE DAY: KCNA
*N.KOREA KIM: WON'T NEGOTIATE UNLESS U.S. SCRAPS THREATS: YONHAP
*N. KOREA KIM SAYS WILL SEND `GIFT PACKAGE' TO U.S. FREQUENTLY
*N. KOREA AIMS TO DEVELOP ICBM CAPABLE OF HITTING U.S. IN 2017
- gold, having shown next-to-no reaction to the testing of a North Korean “firecracker” on Tuesday, this time around managed to pick up a modest safe-haven bid early yesterday as a result of the lobbing of verbal salvos between the protagonists, North Korea and the US.

Good morning everyone.
 
Very little to comment on due to the Independence Day holiday in the US overnight, other than to make note of the sharp bounce in XAU/AUD yesterday during Far Eastern trading which came about entirely as a result of the Reserve Bank of Australia’s monetary policy announcement, which left the cash rate target unchanged at 1.5% and led to the AUD/USD falling from 0.7680 to just under 0.7600 over the course of the session.

Good morning everyone.
 
The DJIA posted a record high overnight ahead of the Independence Day holiday in the US and the Greenback rallied strongly against the majors (EUR, JPY etc). These factors in combination with thinner, holiday affected markets, allowed precious metals bears to press their advantage relatively unimpeded.

Good morning everyone. I trust it was a pleasant weekend.
 
Precious metals continued back-pedalling on Friday. The looming Independence Day holiday in the US tomorrow, as well as a general summer malaise across the northern hemisphere perhaps exerting as much influence as any other factor, like buoyant US equity market indexes.

Good morning everyone and Happy Friday!
 
Precious metals values remained on the backfoot with the normally supportive US dollar weakness factor, taking a back seat to general US equity market strength, higher US bond yields and perhaps more pertinently, market perception that comments from the President of the ECB and the Governors of the British and Canadian central banks, portend a shift back towards monetary policy normalisation and an accompanying rise in interest rates.

Good morning everyone.

There is no rhyme, reason nor logic behind the ‘clip’ of gold that was forced through the COMEX / CME August Gold Futures contract between 9.01am and 9:02am London which saw XAU/USD trade from 1254.3 down to 1236.50. In total 18,149 lots transacted (1.815 million ounces with a notional value of approximately USD 2.26 billion).
 
The most plausible of the reasons offered up around the market place was that it was a “fat-finger” flash crash trade (e.g. 18,000 lots executed instead of 18,000 ounces perhaps?). It’s hard to fathom that a central bank or a large fund would trigger such a ham-fisted execution, especially when significantly more liquidity would have been available with the arrival of New York participants in a matter of hours. Also lending credence to the “fat finger” theory was that there were no commensurate moves across any of the currency or equity markets, nor were there any statements made by any bureaucrats, officials or politicians at the time.

Good morning everyone. I trust you enjoyed your weekend.
 
Gold and silver closed out last week on a somewhat buoyant note, a weaker Greenback providing a boost but arguably, more likely due to the “breathing space” afforded to gold bulls after the latest CFTC COTR data (as at June 20th) showed a monumental level of long liquidation that had come in on the back of the US central bank’s hawkish monetary policy statement.
 
As at June 20th, CFTC data showed:
 
·         A colossal 4.8 million ozs of long liquidation / profit taking (Futures and Options Combined) from the non-commercial gold speculative community, tempered by short-covering as gold found a bottom near significant technical levels.
 
·         Silver non-commercial specs not only abandoned long positions but added to short positions in equal magnitude with a net change in speculative long length of 73 million ozs (Futures and Options Combined).
 
·         The Platinum Group Metals (PGM’s) both saw modest reductions in net non-commercial speculative long length.

Good morning everyone and happy Friday.

Tales of the feted Japanese swordsman Miyamoto Musashi (1584 – 1645) often recount how the Ronin had the ability to defeat reputable foes using just a wooden stick. The relevance of this to financial markets and gold is that, in these days of algorithmically driven moves and sophisticated software that place an abundance of technical analysis tools at the disposal of investors, the elegant simplicity of the humble trendline proved the most effective, much like Musashi’s effectiveness with just a simple wooden stick.

Good morning everyone,
 
Gold and silver continued their retreat on Monday as US equities and Greenback strength weighed upon precious metals investor sentiment. ETF redemptions in gold have also dragged gold lower with the SPDR ETF seeing its largest outflow in six months over the course of last week.
 
Technically, gold has moved to ‘make or break’ levels for bulls in AUD and USD terms.
 
In XAU/AUD terms, gold has tested and held major trendline support at AUD 1634. Should the uptrend line which commenced back in mid-December last year fail to arrest the decline, then the end of March low at AUD 1621.50, the 21st of March low at 1591.40, and the March 15th low at AUD 1578 could all potentially be paid a visit.
 
XAU/USD also is perched just above major trendline support at USD 1241.50, a break of which could trigger momentum driven selling. The 200 Day Moving average at USD 1236.50 would be the last line of technical defence. Beneath, very little in terms of technical support emerges until the May 9th low at USD 1214.
 
Good luck.
 
Regards,
Andre

Good morning everyone,
 
Gold and silver continued their retreat on Monday as US equities and Greenback strength weighed upon precious metals investor sentiment. ETF redemptions in gold have also dragged gold lower with the SPDR ETF seeing its largest outflow in six months over the course of last week.
 
Technically, gold has moved to ‘make or break’ levels for bulls in AUD and USD terms.
 
In XAU/AUD terms, gold has tested and held major trendline support at AUD 1634. Should the uptrend line which commenced back in mid-December last year fail to arrest the decline, then the end of March low at AUD 1621.50, the 21st of March low at 1591.40, and the March 15th low at AUD 1578 could all potentially be paid a visit.
 
XAU/USD also is perched just above major trendline support at USD 1241.50, a break of which could trigger momentum driven selling. The 200 Day Moving average at USD 1236.50 would be the last line of technical defence. Beneath, very little in terms of technical support emerges until the May 9th low at USD 1214.
 
Good luck.
 
Regards,
Andre

Click to see our weekly report that captures the technical outlook for precious metals using Point and Figure and Ichimoku Cloud charts, along with a brief commentary that addresses the changes in speculative positioning in US futures exchanges and global ETFs. We will also discuss economic and other news affecting precious metals.

Click to see our weekly report that captures the technical outlook for precious metals using Point and Figure and Ichimoku Cloud charts, along with a brief commentary that addresses the changes in speculative positioning in US futures exchanges and global ETFs. We will also discuss economic and other news affecting precious metals.