Both gold and silver are tracking higher along with other safe haven instruments like Treasuries and the Japanese Yen following the implementation of further US tariffs, ongoing protests in Hong Kong and China filing a complaint with the WTO against the US.
The strength in gold and silver this morning is somewhat impressive given the fact that the gains were forged directly in the face of a distinct upside (new high for the year) extension in the dollar.
However given turbulent geopolitical issues in China and the UK and given broad-based economic slowing fears, the gold bulls have a number of bullish themes entrenched in the marketplace. Investors continue to see gold and silver as a hedge against current conditions with ETF's at the end of last week purchasing gold for the fifth straight session bringing this year's net purchases to 7.85 million ounces.
Investors also continued to push money into silver with 172,127 ounces purchased last Friday for the seventh straight day of net purchases.
While the gold spec and fund long positioning registered yet another new all-time record long last week December gold this morning is trading below the level where the COT report was measured it is possible that the net long was tempered slightly because of last week's decline.
The gold market might draft some support from a renewed Indian Finance Minister effort to stimulate gold loans through the expansion of the gold monetization scheme. In our opinion seeing the Indian government efforts to promote gold loans again should raise the credibility of gold even further in the country. However some traders see the gold monetization effort as a development that might bring in domestic gold supplies for local jewelers which in turn could dampen gold imports.
The Commitments of Traders report for the week ending August 27th showed Gold Managed Money traders hit a new extreme long of 287,851 contracts. Managed Money traders net bought 2,761 contracts and are now net long 287,851 contracts. Gold Non-Commercial & Non-Reportable traders hit a new extreme long of 398,823 contracts. Non-Commercial & Non-Reportable traders added 12,713 contracts to their already long position and are now net long 398,823.
The silver market also appears to be poised to add to the August gains in early September and perhaps continue its outperformance of gold with its net spec and fund long positioning not as overbought as the positioning in gold. The Commitments of Traders report for the week ending August 27th showed Silver Managed Money traders were net long 58,093 contracts after increasing their already long position by 10,126 contracts. Non-Commercial & Non-Reportable traders are net long 88,235 contracts after net buying 9,878 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.
