June Gold Futures Plunge Beneath 1300.0

Posted Thursday, April 11, 2019 by
Shain Vernier • 1 min read

Safe-havens have taken a beating today, following two major economic and geopolitical events. First, Wednesday’s FOMC Minutes reassured investors that the FED plans to stick with a “flexible” policy through 2019. Second, U.K. PM Theresa May was granted an October Brexit extension by the E.U. Council. While traders are not rushing into stocks, they are selling June GOLD futures in anticipation of an eventual equities rally and dismissal of near-term Brexit worries.

In the spirit of weakening safe-havens, today featured another reduction in U.S. Treasury yields. Returns on the 4-week T-bill ended up falling from 2.390% to 2.375%. Lagging U.S. government debt performance has been a trend for 2019 and is a signal that institutional players may be gearing up for further gains in U.S. equities.

June Gold Futures Plummet, 1295.0 In View

Following bullish momentum becoming exhausted near a key level of topside resistance, prices of June gold futures have plummeted. In a Live Market Update from Tuesday, I outlined an area of converging resistance levels. They proved valid as sellers stepped in a sent gold tumbling.

June Gold Futures (GC), Daily Chart
June Gold Futures (GC), Daily Chart

Here are the key levels to watch for this market:

  • Support(1): Value Area, 1295.0
  • Support(2): Swing Low, 1284.9

Bottom Line: Recently, analysts have been touting gold as a potentially hot commodity. An inverted yield curve, prolonged Brexit uncertainty, and a weakened USD are a few reasons for the bullish outlook. However, this view has not proved true today ― bullion is down more than $10 per ounce.

At this point, the sell-off appears destined to test the 1295.0 area. Until elected, I will have buy orders in queue from 1295.6 in June gold futures. With an initial stop at 1293.1, this trade produces 25 ticks on a bounce from the 1295.0 level.

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