The big news today was the first public appearance of the new Fed Chair Jerome Powell. The market reaction suggests the analysts took his comments as a tad more hawkish than expected. Bond yields and the U.S. Dollar both spiked as Powell spoke primarily about the strengthening economy. At the same time Gold fell inversely with the rise in yields and USD. As we know, the yellow metal tends to fall when the USD strengthens because a higher dollar can make buying gold more expensive for investors using other currencies therefore weakening demand. Higher bond yields also tend to lower demand for gold as it is a non-yielding asset.
The other metals fell alongside gold as May silver futures settled down to $16.434 a troy ounce, April platinum futures dropped to $984.60 a troy ounce, May copper futures settled down to $3.1865 per pound, and June Palladium futures fell to $1,029.25 a troy ounce. Most of this movement can be attributed to the same rise in USD and bond yields that impacted gold.
For April gold, an open in the next session above the pivot of $1,327.30 would show near term resistance at $1,329.70 while a breakout above this level would see longer term resistance at $1,340.80. An open below the pivot would have near term support down at $1,327.30, and a sell off below this would show longer term support at $1,313.80
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Bullion on Bullion.
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Michael Bullion, CAIA
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RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.