Technical Chart Damage as a Result of Dollar Strength

The precious metals complex has traded under pressure today with U.S. dollar strength contributing the most significant percentage of today’s decline. Gold, silver and palladium’s price decline resulted in major chart damage for all three precious metals.  They all sustained a combination of selling pressure and dollar strength which took current pricing of gold and palladium below their 50-day moving averages, and silver below it's 200-day moving average.

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 week’s dynamic upside spike in silver pricing was diminished by today’s over-the-top selling pressure. On Wednesday of last week, silver gained $0.40 on the day, while today’s sharply lower pricing resulted in a $0.56 decline, both giving back the entirety of last week’s gains and closing below its 200-day moving average.  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 today’s lower pricing can be attributed to strong selling which accounts for $35.20 of today’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.

Wishing you as always, good trading,