|Day's range||1,345.50 - 1,357.70|
Recent market unrest has had a significant effect on precious metals and the US dollar, which influences dollar-denominated precious metals and mining stocks. In this part of the series, we’ll look at miners’ RSI (relative strength index) scores and implied volatility. The miners we’ve selected for our analysis are Wheaton Precious Metals (SLW), Randgold Resources (GOLD), AngloGold Ashanti (AU), and IAMGOLD (IAG). In the last 30 days, miners’ performance has been mixed. GOLD and AU have fallen 2.5% and 0.11%, respectively, while SLW and IAG have risen 6.8% and 13.2%.
Crude oil markets rally to get on Wednesday, as we continue to show signs of strength. Part of the reason of course is the concern about tensions in the Middle East, and I think that ultimately, we will find reasons to go higher, at least in the short term.
Gold markets broke out above the $1350 level during the day on Wednesday, but then pulled back to look for support. We did find it there, so I think that we could continue to see an upward move. However, keep a lot of caution in your trading plans as gold tends to be very noisy.
The EUR/USD pair has pulled back slightly during the trading session on Wednesday, testing the 1.2350 level, and an area that has been massively resistive in the past. I think this shows that we are ready to continue going higher, perhaps reaching towards the vital 1.25 level above.
The EUR/GBP got a bit of a boost as deflationary fears entered the picture in the United Kingdom. However, there is a significant amount of noise in the immediate area where we are trading, so it makes sense that we may have gotten a bit of a pullback. I think the next 24 hours could be very crucial for this market.
Gold prices moved higher but remain range bound as the dollar was strong capping upside movements in the yellow metal. Silver prices broke out but gold could not following the path of its less expensive precious metal. Gold prices moved higher on Wednesday bouncing at support near the 10-day moving average at 1,341.
There is no specific reason for the volatility in the gold market today. Traders seemed to be locked into the dollar/gold relationship though.
We’re looking at the possibility of a two-sided trade because the EIA report calls for a build in crude stocks while the API report showed a drawdown. WTI and Brent crude oil could extend their gains if the EIA report shows a decline in crude inventories rather than an increase.
US stock markets rallied during the trading session on Tuesday, showing signs of strength after breaking above minor resistance barriers. Now that we have done that, we can focus on even larger ones.
Gold markets initially tried to rally during the trading session on Tuesday but found the $1350 level to be far too resistant. By pulling back from there, the market will more than likely find value hunters sooner rather than later.
Gold prices rebounded from session lows following a report that showed large options interest in out of the money calls which helped buoy prices during the North American Trading session. Forty six thousand contracts of the GLD gold ETF were purchased as investors bet the prices would rise by May 18. Housing starts in the U.S. rebounded after falling in February. U.S. March housing starts rebounded 1.9% to 1.319 million after falling 3.3% to 1.295 million which was revised from 1.236 million, January starts were bumped up to 1.339 from 1.329 million.
Crude is trading at 66.50 following the close, after topping at 66.75 during the London session. Earlier, modest dollar gains weighed on the contract, though the easing of Mid-east tensions following the allied Syria raid over the weekend has been the main driver. Focus will remain on geopolitics however, with talk of fresh U.S. sanctions on Iran and Russia likely to limit oil’s downside potential. EIA forecasts that production rose in March in its Short-term Energy Outlook.Technicals
The recent unrest in the markets has had a significant effect on precious metals and mining companies. The US dollar has a prominent role in influencing dollar-denominated precious metals and mining stocks.
Usually, precious metal mining companies follow precious metals for price direction. Precious metals increased on Monday, April 16, 2018, which was followed by most mining shares.
In this part of our series, we’ll be looking at the correlation between gold and four mining stocks: Alamos Gold (AGI), Sibanye Gold (SBGL), Yamana Gold (AUY), and Pan American Silver (PAAS). Mining stocks mostly move with gold prices but not always. Among these four miners, Pan American Silver has shown the highest correlation to gold, while Alamos Gold has seen the lowest correlation on a YTD (year-to-date) basis.
Gold ETF investors bought 173.4 tons of gold in 2017, 9% higher year-over-year (or YoY). In 2018 year-to-date (or YTD), the inflows in gold-backed ETFs have been strong. As of April 13, ETF holdings totaled 2,186 tons, which is 5.2% higher YoY.
Geopolitical tensions, trade war fears, rate hikes, and market volatility have left investors restless. Geopolitical issues started when President Trump imposed tariffs on steel and aluminum imports. The issues increased due to a potential trade war between the United States and China. Next, President Trump targeted Russia. Sanctions have been imposed on several Russian entities, including aluminum giant RUSAL. Missile attacks on Syria further escalated geopolitical tensions.
Overall, gold has been rising in 2018, mainly due to the geopolitical tensions that keep increasing. First, we had fears of a US-China trade war, and now we have the Syrian chemical attack and subsequent air strikes. Another crucial element is the decline of the US dollar, which we’ll look at in the next part of this series.
Based on the early price action, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the 50% level at .7779.
Gold and silver mining stocks face increased risks and uncertainty in 2018, not seen by investors and mining management teams for quite some time.
Based on the early price action, the direction of the market today is likely to be determined by trader reaction to the Fibonacci level at 1.2401 and the 50% level at 1.2354.
The crude oil market has finally entered the correction phase. After hectic buying on probable Syria conflict escalation, the time has come to lower the tension, as the expectations were met.
The current rally is being driven by speculators who have been willing to buy strength. The more prudent hedge fund money managers tend to buy weakness. So if the specs decide to book profits then prices may fall to levels more attractive to the professionals.