Hawaii Six O - Gary Wagner
Technical Chart Damage as a Result of Dollar Strength
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The precious metals complex has traded under pressure today with U.S. dollar strength contributing the most significant percentage of todayâ€™s decline. Gold, silver and palladiumâ€™s price decline resulted in major chart damage for all three precious metals.Â They all sustained a combination of selling pressure and dollar strength which took current pricing below their 50-day moving averages.
As of 4:00 PM Eastern standard time, gold futures (June 2018 Comex contract) are currently fixed at $1,326.30, which is a $12 decline (-0.90%). Spot gold is presently fixed at $1,323.90, a decline of $11.30 on the day. Dollar strength contributed the vast majority of damage amounting to -$8.95, with selling pressure contributing another -$2.35.
Although gold pricing opened above its 50-day moving average, dollar strength and selling pressure quickly moved pricing well below the average. This is considered by many analysts to be a significant benchmark used in short-term forecast models.
Last weekâ€™s dynamic upside spike in silver pricing was diminished by todayâ€™s over-the-top selling pressure. On Wednesday of last week, silver gained $0.40 on the day, while todayâ€™s sharply lower pricing resulted in a $0.56 decline, both giving back the entirety of last weekâ€™s gains and closing below its 200-day moving average.Â Of the four precious metals, only silver has a 200-day moving average hitting above its 50-day moving average.
Of all four precious metals, palladium has experienced the most significant percentage decline today. Palladium futures are down 5.26%, currently fixed at $976, which is a net decline of $54.20 on the day. Cash prices for palladium are also under dramatic pressure, losing 4.12% today. However, in the case of palladium, the clear majority of todayâ€™s lower pricing can be attributed to strong selling which accounts for $35.20 of todayâ€™s $42 decline, with only $6.80 being attributable to dollar strength.
The only precious metal being bought today is platinum, which has gained $1.20 in regular trading. However, that gain is dwarfed in comparison to dollar strength which accounts for a -$6.20. Platinum pricing broke below its 50-day moving average last week.
Our technical studies indicate the first level of support in gold at $1,318, which is based on Fibonacci harmonics. This price point is both a 38% and 78% Fibonacci retracement. Below that is the major support level of gold at $1,303.
Resistance in gold is currently at $1,339, with major resistance at $1,355 to $1,365 per ounce.
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Wishing you as always, good trading,