Follow-Through Selling After Breaking Below the 50-Day Moving Average

Gold prices continue to trade under pressure, along with the entire precious metal complex. Initially market sentiment favoring risk on equities moved the metals lower, however as the equities markets turned south precious metals continued to trade to the downside.

In fact, even with the Dow Jones industrial average off by a full percentage point, gold remains just three dollars from the today’s low of $1283.80. As of 4:15 PM Eastern standard time gold futures basis the most active April contract is down $11.40 and fixed at $1287.80.

While gold is trading off by 0.87%, it is platinum which is exhibiting the largest percentage drawdown today. Platinum futures are currently off by 2.91%, at $838.80, a $25 drop on the day. Today’s decline in  platinum has resulted in prices breaking through a critical level of support which resides at $858 per ounce and represents the 0.23% Fibonacci retracement level.

Silver futures also had a substantial decline today losing over a full percent, after sustaining a $.15 drawdown and is currently fixed at $15.10. Most importantly today’s drawdown took silver below a critical level of former support at $15.27. This level is produced using a data set going back over three years giving it strong credibility. That price point could now become resistance.

While palladium futures continue to be the most expensive precious metal, it too was under pressure today and is currently trading down by $18.30. Breaking below $1500 per ounce, the next major level of support does not come in until $1384.20.

Most of the today’s lower pricing in the precious metals is based upon selling pressure, with the dollar only contributing a small portion of that selling pressure. Currently the dollar index is up by .17% and fixed at 96.61.

Initially U.S. equities were exhibiting gains on the day based upon the perception that the two superpowers, (the United States and China) had come closer to finding a solution to the current trade dispute.

According to MarketWatch, “The deal has yet to be completed and hurdles remain on both sides, but a formal agreement could be reached at a summit — likely around March 27 — between President Donald Trump and Chinese President Xi Jinping, those sources said. China’s economy will also be in focus this week with the National People’s Congress due to kick off and officials expected to announce growth targets.”

On a technical basis today’s $11 decline in gold futures moved current pricing definitively below the .38% Fibonacci retracement level, which was former support at $1291.50. This price point could easily become the new level of resistance. The next real level of support falls between $1273 and $1276, which is a 50% retracement of the last leg of this current rally which took gold pricing from $1196 to the yearly high at $1350.

Wishing you as always, good trading,