Obviously, the sudden improvement in global economic psychology was justification for the reversal and washout in gold and silver prices at the end of last week. While the negative gold price influence from the trade situation could be reversed suddenly, the trade impact looks to start the new week helping the gold bear camp as Chinese officials overnight indicated they would like to get a deal as soon as possible.
In other words, the looming December 15th tariff deadline appears to be hastening discussions. Obviously, the much better than expected US nonfarm payroll reading last week reduces market uncertainty and that combined with better German exports overnight keeps last week's risk-on vibe in place.
Countervailing the positive US and German economic news is the fact that Chinese November exports declined but fear of slowing in China was offset by the fact that imports were positive. In total the economic view toward the world continues to improve and that should provide a cap over gold and silver prices.
Certainly, the gold market could draft some support from what was reported to be large protests in Hong Kong on Sunday, but it can take two or three days to fully factor in surprising strong US nonfarm payroll readings and therefore February gold is probably headed back down to consolidation support of $1,459.10, and March silver is likely to extend its downside breakout to the next lower support level of $16.43.
Fortunately for the bull camp, the net spec and fund long in gold has been coming down consistently from a 2019 high of nearly 500,000 contracts but we would suggest the market remains vulnerable until the net spec and fund long falls below 290,000 contracts.
It should be noted that Goldman Sachs has told investors to diversify some long-term bond holdings with gold because they believe "fear-driven demand" will surface for gold.
The silver market appears to have significant damage on its charts and appears to be headed back to the early August lows with almost no visible benefit off the better economic vibe put in place at the end of last week. Even the dollar looks to exert more pressure on gold and silver this week as the ultra-strong US nonfarm payroll reading and lower Chinese overall monthly export figures probably facilitate capital flow into the dollar.
The December 3rd Commitments of Traders report showed Gold Managed Money traders are net-long 226,855 contracts after net buying 21,221 contracts. Non-Commercial & Non-Reportable traders were net long 331,201 contracts after increasing their already long position by 25,855 contracts.
The December 3rd Commitments of Traders report showed Silver Managed Money traders net sold 3,957 contracts and are now net long 44,942 contracts. Non-Commercial & Non-Reportable traders net bought 258 contracts and are now net long 75,689 contracts. On Friday gold ETF holdings declined by 322,734 ounces with silver holdings declining by 1.1 million ounces.
We invite you to subscribe to receive our more comprehensive market update delivered directly to your inbox.
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.
