Precious Metals News Update - 15 February 2018

Hello everyone.
 
Since the last missive a week ago, extremely choppy ‘rinse and spin’ price action has been seen across the precious metals complex (particularly gold), as investors were driven hither and yon by volatility across US equity markets.
 
Yesterday proved no exception.
 
Eagerly anticipated US CPI data came in at +0.5% for Jan (vs +0.3% expected) and Ex Food & Energy +0.3% (vs +0.2% expected) with the Year on Year figures +2.1% (+1.9% expected) and +1.8% (+1.7% expected) respectively. The immediate impact of these figures was a spike in US Treasury yields (as the markets pre-empted Federal Reserve monetary policy hawkishness) which caught gold in a downdraft, driving the yellow metal down from USD 1331 to USD 1317 instantly. A ‘bear trap’ was then sprung when the brakes were slammed on the Greenback and the world’s reserve currency went into reverse against its major pairs. Gold moved swiftly move back to its pre-CPI announcement level above USD 1330 and when it continued advancing beyond resistance at USD 1335 as the US dollar kept heading south, stop-loss and momentum buying was triggered, propelling XAU/USD to a high of just under 1356.00 on the day, leaving bearish speculative interest licking wounds.
 
Technically, XAU/AUD’s advance and retreat from the 1715.00 level for the third time has registered a technical ‘triple-top’ which should, all things being equal, presage lower levels. Current price-action however, indicates that another probe of 1715.00 seems probable and while the rally is likely to be sold, investors should be cautious that the same kind of stop-loss / momentum-driven buying on a topside breakout, of the kind that was seen in XAU/USD overnight through the 1335.00 level, could be triggered.

XAU/USD posted a significant “bullish engulfing” candlestick on the daily chart as a result of the overnight move, which has reversed all downside moves dating back to January 29th. The Jan 25th high at USD 1366.00 now presents as the obvious topside objective with support likely on any pullbacks towards the 21 Day moving average at the USD 1335 / 1336 level. The rapid overnight appreciation would indicate that the more prudent course at current levels would be for investors not to “chase” the market but wait for dip buying opportunities on any pullbacks lest they become the weak / late to the party longs that get cleaned out on any intraday / contra moves.
 
Tough markets. Good luck.
 

Regards,
Andre