Some thoughts on precious metals as we head into Election Day in the United States.
Well, the big day has finally arrived. Some would say not soon enough as the United States heads to the polls today. Markets are unusually quiet today in Asia with very small ranges on most currencies and commodities. Even options volatility curves have been sold in Asia, something I find surprising given the event risk ahead.
Precious metals have vacillated in some fairly large ranges along with most major currencies over the last week. There is no need to dwell on those stories but what is clear is the global markets feel President Trump would be a Brexit style event leading to massive risk-off selling and a run to safe havens. President Clinton would be the status quo and a steady pair of hands allowing the market to get back to the more sedate business of December’s FOMC rate hike, buying USD and pondering global yield differentials. Gold’s rally above 1300 and its subsequent sell-off for example, was entirely driven by the chances of a Trump victory increasing and then receding as the Clinton server saga was finally switched off.
As tomorrow’s election exit polls and final results trickle in during the Asia morning, we will no doubt see some possibly quite large ranges traded in both currencies and precious metals. Silver, palladium, and platinum may be particularly problematic as liquidity in Asia is at a premium at the best of times. With that in mind, it is a good time to look at some of the bigger technical levels and to step out of what will no doubt be a “noisy” day for day traders.
GOLD
The Clinton driven rally topped out in the 1300/1310 resistance zone at 1307. The sell-off subsequently held at 1278 the 200-day moving average. The 100-day moving average is at 1304 and so both hem gold in nicely initially.
Bigger picture, Gold is slowly but surely converging in a triangle formation with trendline support at 1260 and trendline resistance at 1330. A daily close above or below these levels will be significant. The RSI is solidly neutral as is the MACD so it could go either way from here.
SILVER
Another triangle formation. Initial resistance is at 18.6750, the 100-day moving average and the previous daily high aka Gold. Support is at 18.0000 a double bottom.
Bigger picture the triangle has trendline resistance at 19.4550. Trendline support is at 17.6950 with the 200-day moving average at 17.5500.
PLATINUM
The picture is less clear here as it is with Palladium. One reason I suspect is the widespread industrial uses both metals have. Meaning that perhaps they have been influenced more by the broad commodities rally rather than as a safe haven.
Platinum itself looks bearish technically with a rising wedge in a longer downtrend. We are sitting at resistance right here at 1008.00 a double top. Above we have the 100 and 200-day moving averages in the 1015.00/1025.00 area creating further resistance. Trendline support comes in around 992.00 with a daily close below opening up a run to 925.00 on a technical basis.
The MACD is still pointing solidly higher though so, in all honesty, I am conflicted here.
PALLADIUM
Perhaps Palladiums industrial uses have, even more, weight here as technically the picture here is the murkiest. As bearish as Platinum looks Palladium looks bullish from a chart perspective! Hence my previous comments!
Palladium has made a triple bottom at 611.00 and the 200-day moving average is just below at 607.00, making this a strong support zone. The MACD fast line (blue) has crossed the slow suggesting upside momentum as well. Resistance lies at current levels of 651.50 which is a congestion zone of previous daily lows and highs, followed by the 100-day moving average at 666.00. (read the significance of the last level what you will!)
Summary
Election day is upon us and I shall not dwell on the possible outcomes. The charts seem to suggest the Platinum Group metals are driven by other extraneous factors then safe haven buying or selling. As opposed to gold and silver. In what will no doubt be a volatile 24 hours, traders should keep an eye on the bigger levels and the intra-day going becomes very noisy!
