In retrospect, the action last week in the gold market was surprising and impressive as the market stood up against what could have been a significant safe haven liquidation threat. However, unless the optimism from the trade front deteriorates, traders should remain on watch for safe haven liquidation especially with the net spec and fund long in gold sitting at a very lofty level relative to the last six years range.
Gold positioning in the Commitments of Traders for the week ending December 10th showed Managed Money traders net sold 29,401 contracts and are now net long 197,454 contracts. Non-Commercial & Non-Reportable traders reduced their net long position by 28,767 contracts to a net long 302,434 contracts.
We would also note that the gold market has seen a slight breaking up of the consistent inflow pattern to gold ETF's, and the trade has also been presented with negative Indian wedding season demand headlines. Furthermore seeing domestic gold premium prices in India return to discount pricing countervails the jump in India in November gold imports.
On the other hand, Indian buyers seem to be price-sensitive as the November lows did coincide with the jump in imports. It should also be noted that the Indian rupee has managed to gain ground over the last 30 days and the dollar is showing signs of entering a down trend and that could provide the bull camp with a supportive currency-related focus ahead.
In the meantime, risk on from equities should thicken resistance and increase the allure of consolidation support down around $1,463.
Clearly, the silver market has seen only limited benefit from the improvement in global economic psychology with the low to high bounce last week amounting to only $0.62 compared to the November through December wash of $1.80!
Silver positioning in the Commitments of Traders for the week ending December 10th showed Managed Money traders were net long 29,957 contracts after decreasing their long position by 14,985 contracts. Non-Commercial & Non-Reportable traders net sold 12,916 contracts and are now net long 62,773 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.
