Volatile session for gold prices ends higher despite bid greenback

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The focus yesterday was on European banks that took a tumble and were led by the troubled Credit Suisse. Since then, the troubled investment bank has recieved a lifeline from the Swiss National Bank and planning to borrow up to Sfr50bn.

For the FX market, both yen and greenback were bid, and while plenty of commodities priced against the US dollar were in retreat, safe haven gold wasn’t one of them with its price finishing higher after a volatile session. Its precious metal cousin silver was up by a smaller percentage, but the same couldn’t be said for platinum and more so palladium suffering a big red finish.

As for Treasury yields that have been suffering a spike in volatility (MOVE within '08 crisis levels), they finished the session lower recovering partially as of writing this morning. In real terms, they droped and less notable on the further end of the curve, with breakeven inflation rates little changed for the 5 and 10-year.

Market pricing (Refinitiv) is showing by the majority a 25bp (basis point) rate hike from the US Federal Open Market Committee’s meeting next week, but the 4.75%-5% will be the peak with rate cuts starting from July onwards.

US economic data showed producer prices for February dropped 0.1% which was surprisingly positive on the pricing front given expectations were for an increase, with a y/y (year-on-year) print of 4.6% from 6% prior, its core which excludes food and energy unchanged month-on-month while y/y was at 4.4% from 5%.

Retail sales for the same month were down 0.4% and by 0.1% when excluding autos. Housing data showed the weekly mortgage applications rise 6.5% after a +7.4% reading last time around, and NAHB's index for March remain below 50 signifying a negative outlook but improve to 44 from 42 prior.

Empire's manufacturing for the same month was a clear miss at -24.6.

More housing data today with building permits and housing starts, as well as the weekly claims, with tomorrow's focus on preliminary consumer data out of the University of Michigan that includes inflation expectations.

Gold Technical analysis, overview, strategies, and levels

While it was a volatile session, the initial moves favoured contrarian buy-after-reversals off its previous 1st Support level that only just held with intraday lows just shy of its stop loss (S/L) after offering a bit to conformist sell-breakout strategies.

The moves thereafter went past its previous 1st and 2nd Resistance levels stopping out contrarian sell-after-reversals and giving conformist buy-breakouts plenty to cheer about, even if prices are back beneath their previous 1st Resistance as of writing this morning.

IG client* and CoT** sentiment for gold

In sentiment, price gains usually result in a drop in retail trader buy bias, but it has risen instead from majority long 61% to 63%, with silver unchanged at an extreme buy 88% and so too platinum at 86%.

We got another CoT release last Wednesday as they catch up with the latest figures, still showing large speculators holding a heavy buy bias that has risen to 68%. CoT silver however, shifted from majority buy 56% to the middle, platinum majority long 55%, and palladium an opposite extreme sell 80%.

Gold chart with retail and institutional sentiment

• *The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 7am for the outer circle. Inner circle is from the previous trading day.
• **CoT sentiment taken from the CFTC’s Commitment of Traders report: outer circle is from positioning as of February 28th, inner circle as of February 21st.