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April Gold Futures Bounce Back To $1650.0

Posted Wednesday, March 4, 2020 by
Shain Vernier • 2 min read

It’s been a big day on the markets, highlighted by bullish sentiment and risk-on attitude. With only a few hours left in the trading day, the DJIA DOW (+785), S&P 500 SPX (+85), and NASDAQ (+225) are trending deep into the green. Conversely, commodities have put in a relatively tight session. April gold futures are trading just beneath the $1650 handle and WTI crude has posted a modest rally.

On the economic news front, there were several items worth noting from earlier in the U.S. session. Here is a quick look at the highlights:

Event                                                           Actual        Projected      Previous

ISM Non-Manufacturing PMI (Feb.)         57.3                 54.9                  55.5

EIA Crude Oil Stocks (Feb. 28)                  0.785M          2.644M            0.452M

For the second consecutive week, the EIA Crude Oil Stocks figures have come in moderately positive. The growing supply numbers have stopped a rally in April WTI and have sent prices back toward $47.00. 

On the American business front, conditions appear to be improving. The ISM Non-Manufacturing PMI (Feb.) has come in at 57.3, well above projections (54.9) and the previous release (55.5).  At this point, the U.S. economy is performing better-than-expected in the face of NOVID-19 uncertainty.

Let’s dig into the daily technicals for April gold and see if we can spot a trade or two.

April Gold Futures Hold Firm While Stocks Rise

Today’s bullish breakout in the stock market has been accompanied by moderate strength in gold. This action is a bit counterintuitive, as rallies in equities typically accompany plunging safe-haven values. This hasn’t been the case ― April gold continues to regain the lost market share of last Friday.

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

Going into late-week trade, there are a few levels to watch in April gold:

  • Resistance(1): Spike High, 1691.7
  • Support(1): Bollinger MP, 1606.1
  • Support(2): Daily SMA, 1585.4

Bottom Line: In the event that we see a retracement in April gold during the coming U.S. overnight, I will be looking to buy in just above daily support at $1610.8. With an initial stop at $1604.4, this trade produces 50 ticks on a slightly sub-1:1 risk vs reward management plan.

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