Solid Economic Data in China and Equity Rally Limits Bullish Sentiment in Gold

April 2, 2019 - 5:20pm

 by Gary Wagner

We have a mixed bag in the precious metals today with gold and palladium trading higher on the day but platinum and silver trading lower. In terms of percentage gains, once again it is palladium that is leading the way.

As of 3:40 PM Eastern standard time, the most active June 2019 palladium contract is up .74%. This is a net gain of $10.30, with palladium futures currently fixed at $1402.10. This marks the third consecutive day in which palladium prices have closed above the open. It also marks the third consecutive day in which palladium has traded to a higher low and a higher high on the day.

Although palladium experienced some wild swings in overseas trading last night, taking it to its intraday low of $1364, the precious white metal was able to reignite bullish market sentiment closing above $1400 for the first time its recent selloff. Beginning on March 26th palladium futures declined approximately $100 for two consecutive days. This resulted in pricing dropping to $1308.

Gold is also attempting to stage a modest recovery. Although it is still trading below $1300 basis the most active June contract gold was able to gain a $1.20 on the day and is currently fixed at $1295.30.

Platinum closed fractionally lower declining roughly $.70 on the day, with platinum futures currently fixed at $854.60. Lastly silver lost almost a quarter percent, and is currently fixed at $15.065, after factoring in today’s decline of approximately $0.035.

The bottom line is that the geopolitical uncertainty’s and hotspots which have been providing bullish market sentiment for the precious metals still remains intact, and on result. As long as these factors linger, there will continue to be underlying support for the precious metals limiting any real strong downside moves.

The Federal Reserve continues to maintain its extremely dovish tone and monetary policy. The Fed did 180° turn from its extremely hawkish stance in December of last year, when in January did not release a “dot plot” in their statement which was released immediately following the first FOMC meeting of 2019. Then at the end of February Chairman Jerome Powell revealed that the massive liquidation of their assets would take a different course.

During a speech he announced that they would no longer sell assets on autopilot.  Lastly, it was revealed in the statement immediately following last month’s FOMC meeting that they would begin to taper the asset liquidation in May 2019, and the liquidation of assets to conclude by September 2019. The statement also revealed that there would be no rate hikes this year and only one rate hike in 2020.

The Federal Reserve’s new dovish stance when added to the uncertainty of Brexit, and the looming on result trade dispute between the United States and China have collectively been extremely supportive of the precious metals complex as a whole. As long as these factors are present, they should provide bullish market sentiment, as well as curtailing any real price declines in gold.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action

We have no active positions in gold or silver. However yesterday we did issue a buy signal for June 2019 palladium futures.

Buy June Palladium @ the market and place stop @ 1299.13

Maintain Long June palladium @ $1391.80 (current $1401.20). 

Maintain stop @ 1299.13

Gold Market Forecast

Today’s report will cover gold and palladium in detail. As for gold we see a solid base of support forming at current pricing. It could be setting up a buy trigger. We will detail our rational about a long gold trade.

We will also detail the setup for our current long palladium trade. We will address why it was an opportunity that made the yesterday the correct time to enter.

Over the rest of the week we will plot our exit (price) target for palladium, and issue a buy signal in gold if warranted.  

Sentiment Indicator:
Gold -> Bullish
Silver -> Neutral
S&P 500 -> Neutral
Bitcoin -> Bullish