The Hidden Profit Inside Silver Eagles

Gold was fairly steady overnight, trading either side of unchanged in a narrow range of $1288.25 – $1294.  It rose to its $1294 high during Asian time (capped by the top end of the old support level of $1291-94) as the US dollar softened (DX from 97.27 – 97.07).  The dollar was pressured by firmness in the yuan (6.7112 – 6.6990, firmer Chinese PMI data), the pound ($1.3010 – $1.3124, upbeat UK PMI, optimism ahead of Brexit vote later today), and the euro ($1.1215 – $1.1250).  Gold retreated to its $1288.25 low later during European hours as the DX had a modest recovery to 97.15.  The greenback was aided by a pullback in the euro ($1.1227) from weaker German and Eurozone PMI data.  Gold was also pressured by an uptick in the US 10-year bond yield (2.449%) and solid gains in global equities.  The NIKKEI rose 1.4%, the SCI was +2.6%, European shares gained from 0.6% to 1.2%, and S&P futures were +0.7% – lifted by the firming in China’s PMI data along with reports of further progress in the US-China trade talks (China says it will extend suspension on US autos, will include fentanyl in list of controlled substances).  Firmer oil prices (WTI to $60.90, 5-month high, positive Chinese PMI data boosts demand outlook amid ongoing supply issues from Venezuela and Iran) contributed to the strength in stocks.

At 8:30 AM, a much worse than expected reading on US Retail Sales (-0.2% vs. exp. 0.3%) knocked down S&P futures (+16 to 2854), and took the US 10-year yield down to 2.37%.  The DX tumbled to 97, and gold took out resistance at $1294 to reach $1297.

US stocks opened firmer, and were boosted at 10AM (S&P +26 to 2860) by stronger reports on  ISM Manufacturing (55.3 vs. exp. 54.3), Construction Spending (1.0% vs. exp. -0.1%), and Business Inventories (0.89% vs. exp. 0.4%).  Strong gains in Financials, Industrials, Materials, and Communication Services lead the advance.  The 10-year bond yield rebounded to 2.487%, and the DX bounced to 97.28.  Gold retreated in response, and retraced back to $1290.50.

Later in the morning, US stocks remained firm near their highs, and the 10-year yield hovered around 2.48%.  The DX pulled back 97.15, however, from some strength in the pound ($1.3149) on news that the DUP may abstain in today’s Parliamentary vote on Brexit alternatives and that Labour is set to back the alternative Common Market 2.0 plan (very soft Brexit) – opening the door for a majority on plans for a new customs union.  Gold traded up on the news, but was capped at $1293.

US stocks held most of their gains into the afternoon (S&P ), while the 10-year yield ticked up to 2.496% (1-week high).  The DX clawed back to 97.30, and gold was tugged down to $1289.50 – but support ahead of the overnight low held.

Open interest was off 10.5k contracts, reflecting some early long liquidation to Friday’s $1287 and some subsequent covering to the $1300 high.  Volume was much lower with 278k contracts trading as the April – June contract rollover is essentially completed.

All markets will continue to focus on geopolitical events (especially Brexit news), developments with the Trump Administration (especially on US-China trade, potential legal issues), oil prices, and will turn to reports tomorrow on Eurozone PPI and US Durable Goods for near term guidance.

 In the news:

Gold speculators sharply raised bullish bets:   https://www.investing.com/analysis/gold-speculators-sharply-raised-their-bullish-bets-this-week-200402519

Global gold demand will rise to 4-year high in 2019 – Metal Focus:   https://in.reuters.com/article/gold-price-metals-focus/global-gold-demand-will-rise-to-four-year-high-in-2019-metals-focus-idINKCN1RD1F6

US Mint American eagle gold coin sales fall 8% in March:   https://www.reuters.com/article/usmint-coins/u-s-mint-american-eagle-gold-coin-sales-fall-8-pct-in-march-idUSEMNJ3M0T6?rpc=401&

Platinum ETFs hit record high, palladium seen as overbought:   http://www.miningweekly.com/article/platinum-etfs-hit-record-high-palladium-seen-as-over-bought-bmo-2019-03-29/rep_id:3650

Resistance levels: 

$1291-94 – quadruple bottom –  3/11, 3/12, 3/14, and 3/15 lows

$1298-99 – double bottom – 3/18 and 3/20 lows

$1300 – 3/29 high

$1300 – psychological level, options

$1302 – 20-day moving average

$1303 – 3/21 low

$1303-05 – former breakout (6/15/18 top) and prior 5 bottom support (1/29, 2/7, 2/11, 2/13, and 2/14 lows)

$1306-7 – double top – 3/15 and 3/18 highs

$1307 – 3/22 low

$1308 – 3/27 low

$1308 – 50-day moving average

$1309 – 40-day moving average

$1311 – 3/25 low

$1312 – 3/28 high

$1313 – up trendline from 3/7 $1281 low

$1314 – 50% retracement of down move from 2/20 $1347 high to 3/7 $1281 low

$1315 – 3/22 high

$1317 – 3/20 high

$1319-20 – double top – 3/21 and 3/27  highs

$1325 – options

$1325 – 3/25 high

$1327 – 2/28 high

$1330 – double top – 2/27 and 2/26 highs

$1333 –double top 2/22 and 2/25 highs

$1336 – up channel line from 3/4 $1297 high

$1336 – 4/23/18 high

$1342 – double top – 2/19 and 2/21 highs

$1346-47 – double top 2/20 and  4/20/18 highs

$1353-56 – triple top – 4/12/18, 4/18/18 and 4/19/18 highs

*$1365-67– triple top – 8/2/16, 1/25/18 and 4/11/18 highs

*$1373-75 – double top – 7/6/16 and 7/11/16 highs

Support levels:

$1289 – 3/28 low

$1287 – 3/29 low

$1285 – 3/8 low

$1281-84 – quadruple bottom 3/4, 3/5, 3/6, and 3/7 lows

*$1283 – up trendline from 12/28 $1274 low

$1281– 100-day moving average

*$1277-80 – 7 bottoms – 12/28, 1/4, 1/21, 1/22, 1/23, 1/24 and 1/25 lows

$1275 – options

$1274 – 12/28 low

$1265-67 – 12/25, 12/26 ,and 12/27  lows

$1259 – 12/24 low

$1254 – 12/21 low

$1250 – options

$1248 – 200-day moving average