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Gold Prices Are Holding

  • Gold Prices Are Holding

    Thursday, April 13

    OVERNIGHT DEVELOPMENTS

    European stock markets were mostly weaker overnight. Asian stocks were mostly firmer, led by China, which on Thursday injected liquidity into its financial system for the first time in over two weeks. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.

    Gold prices are holding solid gains and are at a five-month high on safe-haven demand.

    Heightened geopolitical risks are still on the front burner of the world marketplace. A meeting between the U.S. secretary of state and Russia’s foreign minister ended Wednesday without agreement and likely pushed the two sides deeper into divisiveness. Secretary of State Rex Tillerson said Russia and the U.S. just don’t trust each other. And during a press conference on Wednesday afternoon Trump said U.S. relations with Russia are “bad.” Trump at the same time praised Chinese leader Xi Jinpin. That move could have been calculated by Trump, as he appeared to suggest a warming elationship with China and its third-strongest military in the world, and one that has the most influence over North Korea. The U.S. Navy has warships headed for waters off the Korean peninsula. Trump also said he is not going to name China as a currency manipulator—likely in exchange for China doing some arm-twisting on North Korea.

    Late Wednesday afternoon the Wall Street Journal released an interview with President Trump, in which he said the thinks the value of the U.S. dollar is too strong and that U.S. interest rates should remain low. This news caught the markets off guard. The U.S. dollar index sunk, gold and U.S.

    Treasuries rallied and the U.S. stock market sold off. Trump appears to now be siding with Fed Chair Janet Yellen, after he ostensibly said he would like to fire her when he was campaigning last fall.

    The key outside markets on Thursday morning see the U.S. dollar index trading solidly lower following Trump’s negative remarks on the greenback. The greenback bulls still have the slight overall near-term technical advantage, but are fading. Meantime, Nymex crude oil prices are slightly lower as data from the U.S. shows oil production continues to rise. The crude oil bulls still have the overall near-term technical advantage.

    U.S. economic data due for release Thursday includes the weekly jobless claims report, the producer price index, and the University of Michigan consumer sentiment survey.

    U.S. STOCK INDEXES

    S&P 500 June e-mini futures: Prices are weaker and hit a three-week low in early U.S. trading. The bulls still have the overall near-term technical advantage but are fading a bit now. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,344.00 and then at Tuesday’s high of 2,356.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,325.00 and then at the March low of 2,317.75. Sell stops are likely located just below those levels.

    Nasdaq index June futures: Prices are weaker and hit a three-week low overnight. Bulls still have the overall near-term technical advantage but are fading a bit. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 5,382.00 and then at 5,400.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 5,350.00 and then at the March low of 5,315.00. Sell stops are likely located just below those levels.

    U.S. TREASURY BONDS AND NOTES

    June U.S. T-Bonds: Prices are solidly higher and hit another five-month high in early U.S. trading. Bulls have upside momentum and have gained the overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 154 10/32 and then at 155 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 153 21/32 and then at 153 even. Sell stops likely reside just below those levels.

    June U.S. T-Notes: Prices are solidly higher and hit a five-month high in early U.S. trading. Bulls have upside momentum and have gained the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 126.08.0 and then at 126.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.38.0 and then at 125.24.0.

    Sell stops likely reside just below those levels.

    U.S. DOLLAR INDEX

    The June U.S. dollar index is lower in early U.S. trading and hit a two-week low. Bulls have the slight overall near-term technical advantage, but have faded this week. The shorter-term moving averages for the dollar index are neutral early today as the 4-day is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are bearish early today.

    The dollar index finds shorter-term technical resistance at Wednesday’s high of 100.760 and then at 101.000. Shorter-term support is seen at the overnight low of 99.930 and then at 99.500.

    NYMEX CRUDE OIL

    May Nymex crude oil prices are near steady in early U.S. trading after hitting a five-week high Wednesday. Bulls still have upside momentum to suggest prices can at least trade sideways, if not sideways to higher, in the near term. However, the market is still short-term overbought and due for more of a downside correction soon. Look for buy stops to reside just above technical resistance at this week’s high of $53.76 and then at $54.00. Look for sell stops just below technical support at the overnight low of $52.82 and then at $52.00.

    GRAINS

    Grain futures markets were firmer overnight, on more short covering. The bears still have the overall near-term technical advantage in the corn, soybean and wheat markets. However, it’s my bias that these markets do not have a lot of downside potential left after the recent selling pressure and heading into the more price-volatile U.S. planting and growing season.

    * Disclaimer: there is a substantial risk of loss in futures and options trading.

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