While the gold bulls were slightly discouraged by the $28 reversal last Friday from a new multiyear high, weekend press provided fresh fodder for further gains in gold. In fact several financial weekly publications kept up the bullish drumbeat on gold from both monetary and safe haven arguments.
Furthermore investors seem to be embracing the broadening bullish environment as total gold derivative holdings Friday returned to the highest levels since February. Given the number of bullish arguments the bull camp in gold and silver might not need definitive weakness from the dollar to continue to climb higher.
While the silver market also forged a significant new high for the move Friday only to close $0.43 below the high it is clearly showing positive leadership action this morning with a definitive higher bid early on.
While we suspect the fundamentals will continue to support the bull case, the markets into the highs last Friday probably reached overbought speculative positioning with gold prices at Friday's highs gaining $43 from the most recent positioning report mark off.
Similarly, silver at times gained $0.94 above the latest positioning report mark-off thereby suggesting the Silver COT report data also understates the net spec long.
The Commitments of Traders report for the week ending July 16th showed Gold Managed Money traders net bought 2,746 contracts and are now net long 219,888 contracts. Non-Commercial & Non-Reportable traders net bought 2,864 contracts on the week and were net long 313,072 contracts.
Silver positioning in the Commitments of Traders for the week ending July 16th showed Managed Money traders are net long 28,096 contracts after net buying 12,629 contracts. Non-Commercial & Non-Reportable traders net bought 16,582 contracts and were net long 60,454 contracts.
In the end, the trend of speculative buying looks to continue and prices this week might be stoked by word of a gold mining sector majority buyout and from the potential for spillover lift from South African PGM mine strike prospects.
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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.
