Keep up-to-date in the past week’s price action and the current geopolitical and economic factors driving the international and local precious metal markets.
Gold
Gold has had a powerful recovery through the last three weeks of July as the price held technical support at US$1208 level, dipping below very briefly before a surge of physical demand sent the price higher again to make a high at US$1271.20 so far.
The main driver of performance was a the USD index (the DXY) plunging through trend line support at the end of June, opening the month at 95.65 and sinking to 93.15, with what looks like critical support at these levels. Look for the DXY to sink to 91.30 if support at current levels fails, further helping gold.
Dollar weakness stems from two issues – insufficient evidence to support strong tightening in US rates, with weak inflation numbers and a dovish announcement from the Federal Reserve that continues to play its cards close to its chest, but chose to highlight the fact that inflation continues to grind on below the Fed’s target level. The second issue is that the US President and his immediate family and some officials continue to be mired in allegations over collusion with Russia pre-election, and an inability to deliver on legislation. The failure to repeal ‘Obamacare’ is now eating into other deliverables, like tax reform and reduction, which is where American prosperity will really be determined.
Precious metal bulls have endured a difficult few weeks, with the price of gold falling from USD $1,266.20oz at the end of May 2017 to USD $1,230.30oz on Friday the 14th July. Silver has fared even worse, declining by almost 10%, with the metal ending last week trading at just USD $15.71oz.
Australian dollar investors have also seen the value of their investments decline, hit not only by the fall in the metals themselves, but also as a result of the incredible rally in the AUD, which is currently trading near USD $0.78.
Combined, this has led to a decline of nearly 10% in the price of AUD gold, which has fallen from over AUD $1,700oz in early June to just AUD $1,584oz today.
The chart for gold priced in AUD is included below, with the sharp sell off from early June seen clearly. Year to date, the yellow metal is now essentially flat in terms of performance.
Good morning everyone.
Friday’s weak US CPI (+1.6% Y-oY) & Retail Sales data releases saw XAU/USD finally reclaim the technically significant 200 Day moving average, as price weakness from the first week of June to the first week of July culminated.
US dollar weakness and a retreat in US Treasury yields was consequently seen, helping to bolster XAU/USD as various Fed officials began to walk back rate hike rhetoric in relation to the September and December meetings of the FOMC. For the moment, gold ETF’s have not benefited with outflows continuing.
Good morning everyone and I trust you enjoyed your weekend.
We are running a little lean here this week, so apologies for the morning wrap coming through as a midday wrap today (and possibly for the remainder of the week) but better late than never!
In a nutshell, precious metals were placed on the backfoot on Friday after another round of strong employment data from the US. The headline Non-Farm Payrolls figure showed that 222,000 jobs were added and that the unemployment rate increased from 4.3% to 4.4% (vs (+177K & 4.3% expected respectively). The May payrolls number was revised upwards from 138K to 152K and April was also revised upwards from 174K to 207K. A total +47K jobs more than previously reported.
Good morning everyone and happy Friday!
A good day for range-traders as the precious metals chopped around / consolidated on Thursday, managing to retain the bulk of recent gains by the close of business in New York.
XAU/AUD moved freely between AUD 1608 - 1616 while 1222 - 1230 was the range seen in XAU/USD.
Mixed economic data out from the US overnight on balance was beneficial for precious metals.
Good morning everyone.
As noted in Tuesdays commentary, geopolitical developments can change market sentiment rapidly and with the newswires broadcasting the following headlines during pre-market trading on Wednesday morning in Asia -
*U.S. WILL BRING N.KOREA'S ACTION BEFORE UN SECURITY COUNCIL
*U.S. SAYS NORTH KOREA TESTED AN ICBM; REPRESENTS ESCALATION
*N. KOREA KIM: U.S. WON'T LIKE `GIFT' ON INDEPENDENCE DAY: KCNA
*N.KOREA KIM: WON'T NEGOTIATE UNLESS U.S. SCRAPS THREATS: YONHAP
*N. KOREA KIM SAYS WILL SEND `GIFT PACKAGE' TO U.S. FREQUENTLY
*N. KOREA AIMS TO DEVELOP ICBM CAPABLE OF HITTING U.S. IN 2017
- gold, having shown next-to-no reaction to the testing of a North Korean “firecracker” on Tuesday, this time around managed to pick up a modest safe-haven bid early yesterday as a result of the lobbing of verbal salvos between the protagonists, North Korea and the US.
Good morning everyone.
Very little to comment on due to the Independence Day holiday in the US overnight, other than to make note of the sharp bounce in XAU/AUD yesterday during Far Eastern trading which came about entirely as a result of the Reserve Bank of Australia’s monetary policy announcement, which left the cash rate target unchanged at 1.5% and led to the AUD/USD falling from 0.7680 to just under 0.7600 over the course of the session.
Good morning everyone.
The DJIA posted a record high overnight ahead of the Independence Day holiday in the US and the Greenback rallied strongly against the majors (EUR, JPY etc). These factors in combination with thinner, holiday affected markets, allowed precious metals bears to press their advantage relatively unimpeded.
Good morning everyone. I trust it was a pleasant weekend.
Precious metals continued back-pedalling on Friday. The looming Independence Day holiday in the US tomorrow, as well as a general summer malaise across the northern hemisphere perhaps exerting as much influence as any other factor, like buoyant US equity market indexes.
Good morning everyone and Happy Friday!
Precious metals values remained on the backfoot with the normally supportive US dollar weakness factor, taking a back seat to general US equity market strength, higher US bond yields and perhaps more pertinently, market perception that comments from the President of the ECB and the Governors of the British and Canadian central banks, portend a shift back towards monetary policy normalisation and an accompanying rise in interest rates.
Good morning everyone.
There is no rhyme, reason nor logic behind the ‘clip’ of gold that was forced through the COMEX / CME August Gold Futures contract between 9.01am and 9:02am London which saw XAU/USD trade from 1254.3 down to 1236.50. In total 18,149 lots transacted (1.815 million ounces with a notional value of approximately USD 2.26 billion).
The most plausible of the reasons offered up around the market place was that it was a “fat-finger” flash crash trade (e.g. 18,000 lots executed instead of 18,000 ounces perhaps?). It’s hard to fathom that a central bank or a large fund would trigger such a ham-fisted execution, especially when significantly more liquidity would have been available with the arrival of New York participants in a matter of hours. Also lending credence to the “fat finger” theory was that there were no commensurate moves across any of the currency or equity markets, nor were there any statements made by any bureaucrats, officials or politicians at the time.
Good morning everyone. I trust you enjoyed your weekend.
Gold and silver closed out last week on a somewhat buoyant note, a weaker Greenback providing a boost but arguably, more likely due to the “breathing space” afforded to gold bulls after the latest CFTC COTR data (as at June 20th) showed a monumental level of long liquidation that had come in on the back of the US central bank’s hawkish monetary policy statement.
As at June 20th, CFTC data showed:
· A colossal 4.8 million ozs of long liquidation / profit taking (Futures and Options Combined) from the non-commercial gold speculative community, tempered by short-covering as gold found a bottom near significant technical levels.
· Silver non-commercial specs not only abandoned long positions but added to short positions in equal magnitude with a net change in speculative long length of 73 million ozs (Futures and Options Combined).
· The Platinum Group Metals (PGM’s) both saw modest reductions in net non-commercial speculative long length.
It’s been a poor end to the financial year for precious metal investors, with both gold and silver declining for most of June. In USD terms, gold started the month around USD $1,266oz, failed in its second attempt to push through USD $1,300oz, before declining into the low USD $1,240oz range earlier this week.
Silver on the other hand has declined more meaningfully, giving up over 3% in the first 3 weeks of June, in USD terms. This has seen a move higher in the Gold to Silver ratio (GSR), which you can see in the chart below, with the GSR now sitting close to 76:1.
Good morning everyone and happy Friday.
Tales of the feted Japanese swordsman Miyamoto Musashi (1584 – 1645) often recount how the Ronin had the ability to defeat reputable foes using just a wooden stick. The relevance of this to financial markets and gold is that, in these days of algorithmically driven moves and sophisticated software that place an abundance of technical analysis tools at the disposal of investors, the elegant simplicity of the humble trendline proved the most effective, much like Musashi’s effectiveness with just a simple wooden stick.
Good morning everyone,
Gold and silver continued their retreat on Monday as US equities and Greenback strength weighed upon precious metals investor sentiment. ETF redemptions in gold have also dragged gold lower with the SPDR ETF seeing its largest outflow in six months over the course of last week.
Technically, gold has moved to ‘make or break’ levels for bulls in AUD and USD terms.
In XAU/AUD terms, gold has tested and held major trendline support at AUD 1634. Should the uptrend line which commenced back in mid-December last year fail to arrest the decline, then the end of March low at AUD 1621.50, the 21st of March low at 1591.40, and the March 15th low at AUD 1578 could all potentially be paid a visit.
XAU/USD also is perched just above major trendline support at USD 1241.50, a break of which could trigger momentum driven selling. The 200 Day Moving average at USD 1236.50 would be the last line of technical defence. Beneath, very little in terms of technical support emerges until the May 9th low at USD 1214.
Good luck.
Regards,
Andre
Good morning everyone,
Gold and silver continued their retreat on Monday as US equities and Greenback strength weighed upon precious metals investor sentiment. ETF redemptions in gold have also dragged gold lower with the SPDR ETF seeing its largest outflow in six months over the course of last week.
Technically, gold has moved to ‘make or break’ levels for bulls in AUD and USD terms.
In XAU/AUD terms, gold has tested and held major trendline support at AUD 1634. Should the uptrend line which commenced back in mid-December last year fail to arrest the decline, then the end of March low at AUD 1621.50, the 21st of March low at 1591.40, and the March 15th low at AUD 1578 could all potentially be paid a visit.
XAU/USD also is perched just above major trendline support at USD 1241.50, a break of which could trigger momentum driven selling. The 200 Day Moving average at USD 1236.50 would be the last line of technical defence. Beneath, very little in terms of technical support emerges until the May 9th low at USD 1214.
Good luck.
Regards,
Andre
Good morning everyone and I trust you had a good weekend.
The effects of Wednesday’s US FOMC monetary policy statement continued to reverberate across the precious metals space as last week drew to a close with the complex remaining on the back foot and under pressure.
The latest CFTC Commitments of Traders Report (as at June 13th) showed:
Significant long liquidation from the non-commercial speculative community in gold prior to last Wednesday’s FOMC statement.
Heavy short selling by silver speculative accounts, erasing the net 24.4 mio ozs increase in long length (Futures & Options Combined) of the prior week.
Platinum non-commercial speculative investors re-entering on the short side.
The squeeze in palladium eased but the industrial metal remained in demand and outperformed the remainder of the precious metals complex.
Good morning everyone.
The focus overnight was entirely upon the US central bank’s FOMC monetary policy statement which confirmed a widely anticipated interest rate hike by raising the Fed Funds Rate by 0.25%.
Good morning everyone and I trust you enjoyed your long weekend.
Keeping it brief this morning, gold and silver are both weaker since we last convened in spite of a softer US Dollar Index and geopolitical tensions in the Middle East. In all likelihood the significant increase in long length as evidenced by the latest COTR data, triggered some speculative rebalancing / profit taking on Monday ahead of Wednesday’s FOMC announcement where it is anticipated that interest rates will be increased by the US central bank.
The focus of the week will be the meeting of the US central bank’s Federal Open Market Committee (FOMC) on Tuesday & Wednesday (with a monetary policy statement to follow at it’s conclusion), where market consensus expects that the Fed will move to raise its cash rate.
Good morning everyone and Happy Friday!
Gold, silver and platinum slid lower in AUD terms before bargain hunting and shortcovering lifted them out of their lows while a ‘squeeze’ in palladium continued to drive the industrial metal higher.
Overnight the ECB left rates unchanged (main refinancing operations, marginal lending facility and deposit facility rates remain at 0.00%, 0.25% and -0.40% respectively) but a slight change in the statement’s wording from rates remaining at “present levels or lower,” to “The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases,” saw the Euro weaken against the Greenback which weighed on precious metals values, with the exception of palladium which has seen the forward curve move into heavy backwardation (1 month trading at -4% and the EFP blowing out to -$6.00).
Good morning everyone.
If gold is the thermometer that reflects the health of the global economic and geopolitical body at any moment in time, then the yellow metal’s rally overnight to the mid-April high (in USD terms) appears to be signalling that all may not be well. The prognosis may carry additional weight given the level of support in spite of the old tried and (relatively) trusted aphorism “Sell in May and go away”, which references the period between May and the start of September when the markets slip into a torpor due to impact of the northern hemisphere summer vacation period.
Good morning everyone.
Economic data releases are seemingly providing the intraday speculative flux at present, with political and geopolitical events less dominant for the moment but still a major factor nonetheless.
In USD terms, both gold and silver trekked sideways on Monday but in AUD terms both were driven lower throughout the day, as the AUD found friends again, rallying almost 80 pips to just shy of 0.7500
Good morning everyone. I trust you had a good weekend.
Having drifted lower throughout Asian trading on Friday before a positon-squaring bounce into the European session, gold was spurred higher by a worse than expected Non-Farm Payrolls figure from the Bureau of Labor Statistics in the US.
May Non-Farm Payrolls came in at +138K (vs +180K expected, whilst NFP’s for April were also revised lower by 37K). Consequently, the US Dollar weakened, US treasuries rallied and the precious metals complex spiked higher as investors reasoned that while a rate tightening by the US Federal Reserve at its June meeting remains on the cards, further monetary policy tightening throughout the year was decidedly less likely. Peculiarly, US equity markets remained buoyant in spite of the headline employment figure.
Further strength has been seen at the open in pre-market trade this morning, on the back of the appalling events in central London on Saturday evening which justifiably has received saturation coverage elsewhere and requires no further comment here. What does merit comment however, is the effect this will have on this Thursday’s UK General Election. The Theresa May led Conservatives were seemingly headed for an increased majority when the snap poll was called but the polls have tightened considerably (for whatever they are worth) over the course of the campaign and now, the impact Saturday’s attack will have on the outcome is anyone’s guess - hence the ‘safe-haven’ bid that the metals have acquired this morning in early trade.
Technically, both XAU/AUD & XAU/USD have moved beyond significant technical barriers and it now remains to be seen whether precious metals bulls have the momentum behind them to further the advance. In XAU/AUD terms, the way remains opens to the early November high at 1760 while XAU/USD will have its sights set on the mid-April high at USD 1295.50 (and then the psychological ‘big-figure’ at USD 1300).
Friday’s release of the weekly CFTC Commitments of Traders data (as at May 30th) showed;
· Non-commercial gold speculative buying exceeded short-selling by a ratio of 7:1 (Futures & Options Combined) over the course of the week. Net long length increasing by approximately 1.2 mio ozs as various data releases created uncertainty in relation to the US FOMC’s monetary policy announcement later this month.
· Silver’s rally was entirely short-covering. Buying interest was next-to-nothing whilst short positioning was significantly reduced by approximately 50 million ounces.
· Platinum non-commercial speculative accounts pared back positioning with both long and short exposures reduced.
· Palladium saw a modest increase in non-commercial speculative long length of approximately 40,000 ozs.
Good morning everyone and Happy Friday. The winning post is in sight!
A real mixed bag across the precious metals complex yesterday with various data releases creating flux ahead of today’s all-important employment data release by the Bureau of Labor Statistics in the US.
XAU/AUD moved beyond the previously solid technical barrier at the 1710 level. XAU/USD which had drifted lower throughout the day, pared losses by the New York close. Silver which had been driven lower during Asian and European trading, bounced rubber-like once US trading was underway. Platinum on the other hand was shunned by investors while palladium advanced solidly.
Good morning everyone.
After some backfilling (technical corrective & consolidation work) during Far Eastern trading yesterday, the precious metals complex (gold particularly) steadied and forged ahead to re-test Friday’s highs.
Supportive elements included the uncertainty created by the tightening of various polls ahead of next Thursday’s UK General Election (some showing the Corbyn led Labour party within 3% of the ruling Conservatives), with an additional leg-up provided by some soft economic data out of the US, especially a poor Pending Home Sales figure. This placed the US dollar under pressure, benefiting gold as investors were also forced to temper their expectations of an interest rate hike by the US Federal Reserve at their June meeting.
U.S. NAR Pending Home Sales (April) were down 1.3% (109.8 vs 112.0 expected and vs 111.3 for March; -5.4% y/y). This represents the biggest drop in pending home sales since August 2014 and the second monthly drop in a row in addition to downward revisions over the last few months.
Technically, both XAU/AUD & XAU/USD are positioned within striking distance of major resistance zones. XAU/AUD at 1710/15 & and XAU/USD at 1275. The release of US employment data on Friday could have the final say on whether these levels are dispensed with and if so, there is the potential for significant stop-less and momentum driven buying.
Good luck.
Regards,
Andre