While the uptrend in gold that started back in late May generally remains, a number of bullish fundamental themes have shifted in favor of the bear camp. While the gold bulls might be able to continue to stand up to the rising dollar, a more problematic problem for gold could be the lack of a 50 basis point rate cut from the US Fed later this week.

Certainly the potential for safe haven interest from, the protests in Hong Kong, tensions in the Middle East and from any breakdown in US trade talks remain in place, but gold seems to have lost its sensitivity to safe haven developments over the past five weeks.

While predicting any outcome from trade talks is highly precarious, we suspect the initial headline flow from the negotiators heading into the talks could present a slight safe haven selling event. Perhaps the most damaging situation for gold is the massive spec and fund long positioning which two weeks ago was at the highest level since August 2016!

Another item that could become more important for the bear camp this week is any news of further outflows from gold derivative holdings, as the pattern of inflows was either broken or simply stalled last week. In fact, at the end of last week, total gold derivative holdings fell to the lowest level since the middle of June.

In the silver market, the market became extensively overbought from the 77 cent rally in July and given that the most recent positioning report in silver showed the largest net spec and fund long since September 2017 the market is overbought from a technical perspective. In short the silver market will need fresh macroeconomic optimism, perhaps from revived hopes of a 50 basis point rate cut and/or favorable trade headlines, to resume the upward march in prices.

Gold positioning in the Commitments of Traders for the week ending July 23rd showed Managed Money traders net sold 2,371 contracts and are now net long 217,517 contracts. Non-Commercial & Non-Reportable traders were net long 318,421 contracts after increasing their already long position by 5,349 contracts.

The Commitments of Traders report for the week ending July 23rd showed Silver Managed Money traders added 26,065 contracts to their already long position and are now net long 54,161. Non-Commercial & Non-Reportable traders net bought 21,093 contracts and are now net long 81,547 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.