The gold market has started out under pressure this morning and is falling despite a somewhat softer US dollar trade. Asian traders indicated falling interest in gold and silver today because of hope for a trade deal from weekend headlines, ongoing expectations of favorable economic number progression, residual US equity market strength and from news that gold ETF holdings have continued to decline.
However, seeing the dollar track definitively lower in the face of the strong data last week would seem to give off signs of a key top in the dollar, and that clearly sparked a wave of gold and silver buying. One could also take a roundabout bullish argument that soft inflation readings within the GDP report cement an "on hold" Fed view further into the future.
Supportive developments for gold include evidence that Hong Kong gold exports to China in March jumped to 36.9 tons versus 33.1 tons and news that Azerbaijan's state oil fund purchased nearly 21 tonnes of gold in the first quarter of this year, as that is a large purchase for a somewhat small entity.
It should be noted that the gold market once again reduced its net spec and fund long positioning by a significant amount last week, and therefore the market was balanced technically and value hunting buying last week probably hasn't put the market into an overbought condition.
The April 23rd Commitments of Traders report showed Gold Managed Money traders are net short 22,328 contracts after net selling 18,359 contracts. Non-Commercial & Non-Reportable traders were net long 57,761 contracts after decreasing their long position by 22,653 contracts.
In a similar fashion, the silver market showed a spec long position of a very minimal level and that combined with the rejection of the sub $14.75 area could provide the market with fairly solid close in support early this week. Silver positioning in the Commitments of Traders for the week ending April 23rd showed Managed Money traders net sold 7,032 contracts and are now net short 17,870 contracts. Non-Commercial & Non-Reportable traders are net long 17,767 contracts after net selling 4,711 contracts.
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