Zaner Spot Gold Report

Spot gold starts the week on its heels, down nearly 1% at 2-week lows after posting a close below the 20-day moving average on Friday. The yellow metal is being weighed by continued strength in the dollar. Support offered by geopolitical and trade tensions continue to fade.

As suggested on Friday, that close below the 20-day MA leaves the 1319.28 low from early-April vulnerable to a challenge. We’ve traded as low as 1323.40 thus far this morning.

Today’s downside extension takes out the 50-day moving average and constitutes more than 61.8% retracement of the leg-up from 1302.76 (01-Mar low) to 1365.26 (11-Apr). That suggests the low end of the range at 1302.76 is vulnerable to a challenge.

However, gold is oversold on a short-term basis after three consecutive days of losses. We could see a little bit of a bounce first and we’ll watch how the market handles that rebound.

With the low end of the range looking increasingly attractive, the 1365.26/1366.08/1375.17 series of highs have been further reinforced as resistance.

Silver has tumbled back below $17 and is presently off more than 2% from Friday’s close at 17.10. This leaves the white metal firmly retrenched in its well defined range.

Rising yields have driven the dollar index to 8-week highs, where it is presently threatening the 90.93 peak from 01-Mar. The 10-year yield is up 17 bps this month and has nearly reached 3%.

 The 90.93 high in the DX corresponds closely with the 100-day (90.76) and 20-week (90.61) moving averages. This is a pretty significant resistance zone for the greenback, but the dollar is overbought at this juncture, which may make penetration difficult initially.

The Chicago Fed National Activity Index tumbled to 0.10 in March from a positive revised 0.98 in February. Markit PMIs edged higher in April and existing home sales bested expectations in March.

Non-Reliance and Risk Disclosure: This opinions expressed here are for general information purposes only and should not be construed as a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Group LLC, unless otherwise expressly noted.