Strong Bullish Sentiment for U.S Equities Pressures Gold Pricing
Gold, silver and platinum are all trading lower today. Gold pricing had the greatest percentage drawdown on the day, with the most active June futures contract currently trading at $1291.70 which is a decline of $6.80, or .52%. Silver futures are coming in second with a decline today of $.04 which is a .26% drawdown. Currently most active silver futures are fixed at $15.07. The only precious metal bucking today’s trend is palladium, which has gained 3.68% in the futures market. Palladium futures are currently fixed at $1391.20 which is a net gain of $49.40 on the day.
It is obvious that while the vast majority of the precious metals are trading lower as equities have a strong upside day. However, the industrial component of palladium along with its unique supply issues, (Russia controls the vast majority of palladium being sold) are being highly supportive of this metal.
The Dow Jones industrial average gained 329 points in trading today closing at 26,258. This is a net gain of 1.27% on the day. The S&P 500 as well as the NASDAQ had strong upside moves today with each of these indices gaining over a full percentage point.
Today’s rally in U.S. equities is in response to a strong global rally which began in China after the release of the Caixin China manufacturing purchasing managers index which rose from 49.9 in February to 50.8 in March.
According to MarketWatch this was the first reading above 50 signaling an expansion and activity for the first time in four months. MarketWatch also reported that there was strong data in the U.S. from the Institute for supply management manufacturing index which revealed that activity in the United States greatly accelerated and came in stronger than expected at 55.3 in March versus a two year low of 54.2 a month earlier.
Our technical studies indicate that there could be strong support for gold futures at $1291.60. This number is derived from the .38% Fibonacci retracement. This retracement covers a data set from $1196 up to $1350, which is the entire length of the last rally that began in mid-November of last year. The studies also indicate that current resistance resides between $1313 and $1314. This is based upon a Fibonacci retracement of .23%. This retracement number is from the same data set.
Concerning palladium our technical studies indicate that there is strong support for palladium futures at $1306 per ounce. This support level is based upon the 100-day moving average. These studies also indicate current resistance in palladium futures at $1427.30 which is the 50-day moving average.
Wishing you as always, good trading,