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What is next for gold?

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E-mini S&P (December)

Yesterdays close: Recovered well off session lows and settled at 2591.

Fundamentals: Equity markets are a little lower heading into this morning and tax-reform is on everyones mind as the week begins to wind down. The House Ways and Means Committee is working to redraft their bill and Senate Republicans are said to introduce a completely different bill today. The market has taken this in stride and worked off session lows early yesterday. President Trump introduced $250 Billion in China deals which sounds great on the surface but anything that lacks details and is hailed as a miracle by the other side does present question marks. Chinese CPI last night was mixed while PPI was better than expected. We have a lot of ECB speak through our hours and comments from Board Member Coeure were hawkish as expected. The EUs Executive Commission put out its GDP forecast and this years raised estimate of 2.2% would be the highest since 2007. However, growth will taper off next year to 2.1%. Initial Jobless Claims are due at 7:30 am CT.

Technicals: Price action traded to a new all-time high of 2594.50 last night around the time of Chinese data, however, the tape has bled lower into this morning. The trend line from the 2541.50 low we discussed yesterday now comes in at 2579 this morning and closely aligns with the 2581.75 as well as yesterdays session low. This will be the support level to watch on the session and a move below here should encourage a push to 2573.50-2574.50. We are now neutralizing our stance and would like to see consolidation lower before looking to step back in.

Bias: Neutral

Resistance 2594.50-2596**, 2600*, 2616**

Support 2579-2581.75**, 2573.50-2574.25**, 2568*, 2561.75-2562.25**, 2555*, 2539.25-2543***

Crude Oil (December)

Yesterdays close: Settled at 56.81, more than a dollar from new highs.

Fundamentals: Yesterdays EIA report was more on the bearish side as the headline read showed a build of 2.2 mb of Crude when a draw of 2.9 was expected. However, the products combined for a draw of 6.7 mb when only a draw of 3.4 was expected. Production picked up in the tune of 67,000 bpd and exports which have led headlines fell sharply. There is a geopolitical premium trying to work its way into the market and this coupled with recent momentum has encouraged buyers at every pullback.

Technicals: Support at 56.51-56.79 has worked tremendously to keep the immediate term trend intact. Yesterdays session low was 56.41 shortly after the EIA read and before a spike to new highs at 57.92. Price action continues to hold well, hugging the $57 mark, but bulls want to begin to exude caution through todays session and look for a low to come in overnight heading into Friday.

Bias: Bullish

Resistance 58.97***

Support 56.51-56.79**, 56.18*, 55.02-55.25***, 54.45-54.54**, 53.76-53.90**, 52.86-53.11***

Gold (December)

Yesterdays close: Gained almost $8 on the session to settle at 1283.7

Fundamentals: Tax-reform is in the spotlight with the House Ways and Means Committee redrafting their bill and Senate Republicans said to release their own version. A failure to show progress this week will help boost Gold. President Trumps $250 billion in China deals have grabbed headlines but is doing very little to help equity markets. Traders should keep an eye on the S&P and weakness will bring support to the metal. Initial Jobless Claims are due at 7:30 am CT. Michigan Consumer Confidence is due out tomorrow morning.

Technicals: Price action settled clearly above resistance at the 1280.5-1281.6 level and now eyes the 1291.3-1292.9 level in order to begin to squeeze shorts ahead of the weekend. The session high comes in at 1289 and we want to see follow through on the session in order to hold this positive momentum. The bears look to reject resistance and suppress price action back below 1280.5-1281.2, which includes the 100-day moving average, to regain an edge.

Bias: Bullish

Resistance 1291.3-1292.9**, 1298.4-1300**, 1308.4-1312.6**

Support 1280.50-1281.2**, 1262.8-1269***, 1243.6**

Natural Gas (December)

Yesterdays close: Settled at 3.175

Fundamentals: Storage data comes squarely in the picture today as price action battles against major three-star resistance. Estimates have edged higher and at +15 bcf. We are at that time of year and price point (not to mention on resistance) where a surprise draw would be a huge catalyst to the upside. Among President Trumps China deals is natural gas project in Alaska, this shows a strong commitment to the sector and regions (the struggling Alaskan state and doing business with China).

Technicals: Major three-star resistance at 3.179-3.198 is working to keep price action in check ahead of todays data read. We maintain our bullish bias but a close above here is needed to ignite a move to 3.297-3.353. A close on the week back through the gap and below major three-star support will signal a failure. Price action must continue to build a shelf above 3.033-3.05 in order to remain constructive on the week at a bare minimum.

Bias: Bullish

Resistance 3.179-3.198***, 3.22**, 3.297-3.353***

Support 3.103*, 3.033-3.05**, 2.984-2.998***, 2.847-2.861**, 2.753-2.7565***, 2.486-2.522****

10-Year (December)

Yesterdays close: Settled lower at 12508

Fundamentals: Prices grinded lower through yesterdays session and after the 10-year auction produced a bid-to-cover ratio of 2.48. Other safe-haven assets are performing much better in the last to 12-24 hours. Tax-reform will be front and center to finish out the week and hurdles here would help the 10-year against support. Initial Jobless Claims are due at 7:30 am CT and tomorrow brings Michigan Consumer data to round out the week.

Technicals: Yesterday we spoke of staying nimble and that the market is showing signs of exhaustion. Price action is testing first key support this morning and traders should keep an eye on a weaker U.S dollar to help bring support against this level. However, a close below this level to finish out the week could easily begin a grind back to recent lows and into the Fed meeting one month away.

Bias: Neutral/Bullish

Resistance 12519**, 125255**, 12601**, 12615***

Support 12502-125035**, 12419**, 12400**, 12222 12229***

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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

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About the author

Bill Baruch is President and founder of Blue Line Futures a leading futures and commodities brokerage firm located at the Chicago Board of Trade. Blue Line’s mission is to put the customer first and bring YOU the best customer service, consistent and reliable research and state of the art technology. Bill has more than a decade of trading experience. Working with clients he focuses on developing trading strategies that present a clear objective for both long and short-term trading approaches. He believes that in order to properly execute a trading strategy, there must be a well-balanced approach to risk and reward.

Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER which followed running a trade desk at Lind Waldock and MF Global.

Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications.

Contributing author since 10/6/17 

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