With a six-day high posted early this morning in February gold it is clear that the bull camp has regained control. Apparently, economic uncertainty was sparked following comments from President Trump which seemed to dash near term hopes of a trade deal with China.
In fact, the President suggested it might be better to wait until after the November 2020 election and that would seem to suggest that trade negotiations are once again at a serious impasse. Another major uncertainty lifting gold prices this morning includes the threat of a 100% US tariff on French Luxury goods which the US said was retaliation for a French digital services tax that would mostly hit large US companies.
In addition to the outside market forces lifting gold, the market has found internal buying interest from the somewhat surprising news that Indian November gold imports jumped by 31 tons above October which posted a 40-ton import tally. Supposedly Indian jewelers restocked supplies last month which means the $100 break from the August/September highs enticed Indian buyers back into the market. However Indian gold has now returned to a premium to external prices for the first time since the middle of summer and that has resulted in Indian importers increasing imports of partially refined gold.
Another very minor positive for gold this morning is news that the Mongolian central bank has purchased 14.4 tons of gold so far this year.
Other positives for gold include at least two gold sector buyout efforts. Apparently, a Canadian-based mining company announced a buyout proposal for a British-based gold miner and a Chinese company announcing its intention to acquire a Canadian gold mining company.
While the gold market has not shown a tight correlation with the action in the dollar, the dollar action this week has clearly shifted from a negative for gold and silver into a positive.
In looking ahead, it would appear as if February gold has added to the credibility of consolidation support just above the $1,450 level and our gut instinct suggests trade issues (China, South America and Europe) will continue to favor the bull camp this week. Even the positioning report is supportive of gold and the specs liquidated positions last week and the overall net spec long is at some of the lowest levels since June!
The Commitments of Traders report for the week ending November 26th showed Gold Managed Money traders net sold 20,054 contracts and are now net long 205,634 contracts. Non-Commercial & Non-Reportable traders net sold 30,065 contracts and are now net long 305,346 contracts.
Silver positioning in the Commitments of Traders for the week ending November 26th showed Managed Money traders added 8,183 contracts to their already long position and are now net long 48,899. Non-Commercial & Non-Reportable traders are net long 75,431 contracts after net buying 5,599 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.
