The gold market has started the week out on a very positive footing as would be expected following the oil facility attack in Saudi Arabia over the weekend. However the reaction in gold prices this morning leaves a lot to be desired by the bull camp as the market failed to fully sustain the initial wave higher and prices as of this writing were sitting $10 per ounce below the overnight highs!
In short it would appear as if the gold and silver bulls need to see signs of a continuation of the incident with threats of retaliation or threats of additional attacks to extend beyond the 24 hour highs. However the gold market should be emboldened by a wave of bullish gold/silver forecasts over the weekend with Citigroup seeing the "potential" for gold to rise above $2000 over the longer term!
Fortunately for the bull camp in gold the recent record spec long was corrected with the action of the last two weeks and that alone has probably provided some renewed buying interest as traders/investors fear they could "miss" a resumption of the May through early September rally.
While some western domiciled ETF/derivative gold holding measures showed outflows of gold at the end of last week (classic ETF's reduced holdings by 156,328 ounces) a large money manager Black Rock indicated their gold ETF assets reached a record level at the end of last week.
Furthermore the market also saw evidence that money in India is flowing to gold ETF's which could be a "monumental" development in a nation historically infatuated with the metal. Apparently Indian ETF's saw significant inflows despite record high domestic price levels with holdings reaching the highest level since December 2012! In fact in August alone, gold ETF's in India saw a 1.5 billion rupee inflow!
The bull camp in silver however should be cheered by the fact that silver continued to see ETF inflows with a purchase Friday of 358,695 ounces which brings the annual purchase level to 113.2 million ounces.
The September 10th Commitments of Traders report showed Gold Managed Money traders were net long 247,728 contracts after decreasing their long position by 42,981 contracts. Non-Commercial & Non-Reportable traders reduced their net long position by 54,590 contracts to a net long 347,021 contracts.
Obviously the silver market severely damaged its charts at the end of last week, with a dramatic washout/extension and it could be difficult to quickly arrest that slide without testing the $17.00 level. In fact, without December silver futures trading back above $17.95 in the early going today, it is possible silver will fall under more classic technical stop loss selling especially given that the net spec and fund long in silver is at the highest levels since early 2017!
Silver positioning in the Commitments of Traders for the week ending September 10th showed Managed Money traders reduced their net long position by 1,905 contracts to a net long 61,561 contracts. Non-Commercial & Non-Reportable traders were net long 92,540 contracts after decreasing their long position by 1,065 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.
