With gold and silver markets Friday joining the rest of the metals complex in a higher trade, complements of further weakness in the dollar, the complex appears to have regained the bullish resiliency seen throughout the November through February trade.
However, we are somewhat suspicious of the recent gains in gold as global political uncertainty seems to be moderating and economic data seems to be more deflationary than anxiety ridden. Another major negative development for gold from last week are suggestions that India might be in the midst of a long-term shift from the importation of refined gold to a country increasing domestic refining.
However gold prices might draft some support from the fact that the Indian currency recently reached its strongest level in more than seven months as that could increase purchasing power by one of the world's largest gold buying countries.
Exchange traded funds on Friday added 35,157 ounces to their holdings which brings this year's net purchases to 686,504 ounces. Even the silver exchange traded funds saw inflows with 3.5 million ounces purchased Friday but that still leaves the year to date change in holdings in negative territory.
While the most recent positioning report might understate the magnitude of the net spec long (prices Friday closed above the level where the report was measured) the net spec and fund long is basically at the middle of the last two years range. The March 12th positioning report showed the net long at 130,368 contracts. With the dollar on several occasions last week falling below the psychological 96.00 level and seemingly remaining within a downward track from the March high, the gold bulls look to start the trading week with an edge.
The net spec and fund long in the silver market was 46,161 contracts which is effectively the middle of the last five years range. The Commitments of Traders report for the week ending March 12th showed Gold Managed Money traders net sold 6,098 contracts and are now net long 41,774 contracts. The Commitments of Traders report for the week ending March 12th showed Silver Managed Money traders were net long 9,633 contracts after decreasing their long position by 8,508 contracts.
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Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Financial Services LLC, unless otherwise expressly noted.
