Spot gold is back on the defensive after Friday’s rebound from new 16-month lows failed to gain any traction. The yellow metal is being weighed by renewed strength in the dollar.
While price action is confined to Friday’s range thus far, the dominant downtrend remains highlighted. Last week marked a fourth consecutive lower weekly close and as mentioned above, a new 16-month low. The Zaner Daily Metals Newsletter noted “signs of significant liquidation of gold and silver spec longs in the COT report.”
“Hedge funds and money managers added a hefty 13,931 contracts to their net short position in the week to July 31, bringing it to 41,087 contracts, the biggest since records became publicly available in 2006,” according to a Reuters article this morning. The market is really short, which continues to suggest there is scope for a corrective rebound out of this area.
We’ll continue to watch the 9-day moving average (1219.61 today) on a close basis for hints of bottoming. The 20-day MA (1228.13 today) is still the more important level. Last week’s high at 1228.59 bolsters this level.
The dollar seems to have shrugged off Friday’s nonfarm payrolls miss. The dollar index has approached the 95.65 high from 19-Jul. Penetration of this level would reestablish the dominant uptrend and shift focus to the 96.51 high from 05-Jul-17. Such gains would likely apply additional pressure to the precious metals as well.
Silver was unable to sustain intraday gains above 15.44 on Friday, resulting in an eighth consecutive lower weekly close. That’s pretty bearish, but on the positive side, silver continues to trade above the 15.17 low from 19-Jul.
There is still potential for a double bottom at 15.22/17, but resistance at 15.67 must be exceeded to confirm this pattern. Friday’s high at 15.55 provides intervening resistance, which corresponds with the 20-day MA today.Platinum is trading lower on the day as it continues to straddle its 20-day moving average (828.17 today). With the 791.85 low well protected at this point, we’ll call the short-term tone neutral. However, resistance at 844.13/845.27 must be cleared to set a more positive tone.
Platinum is trading lower on the day as it continues to straddle its 20-day moving average (828.17 today). With the 791.85 low well protected at this point, we’ll call the short-term tone neutral. However, resistance at 844.13/845.27 must be cleared to set a more positive tone.
Palladium is trading lower for a fourth consecutive day. Just over 50% of the recent rally from 859.06 to 941.78 has now been retraced. Repeated failures to sustain gains above the 20-day MA (920.25 today) keep the dominant downtrend highlighted.
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