With the week starting out with positive sentiment flowing from equities and the signing of the trade one phase deal moving forward without glitches, the bear camp appears to have the edge.
Adding into the negative bias is 3rd straight day of gold ETF liquidations, bringing this year's net sales to 247,304 ounces. Silver ETFs also reduced by 3.1 million ounces bringing the year to date sales to 5.59 million ounces.
While the most recent positioning report in gold did not show a fresh record all-time high reading, we suspect a record would have been posted if the report was compiled at last week's high. Certainly seeing the net spec and fund long position near 400,000 contracts creates the potential for further stop loss selling and extensive price volatility this week.
While geopolitical tensions between Iran and the US remain high, it is possible supportive headlines for gold will be largely absent in the near term as both parties appear to be content to "stand down" from the brink of war. Fortunately for the bull camp in gold, the market appears to have found some measure of value around the $1,550 level on the charts with that level being a key value zone in the August and September timeframe.
While it is difficult to make last week's US nonfarm payroll readings into a definitive uncertainty, the numbers did result in a bounce in gold prices in the immediate aftermath of their release and therefore the market continues to benefit from economic numbers coming in under expectations. Others will suggest that a deceleration of US jobs growth will extend the duration of ultra-low global rates which in turn could facilitate the extension of the gold bull market.
However, we suspect resistance in gold around the $1,574 level could be thick early this week due to the anticipated signing of the US/Chinese trade deal.
The January 7th Commitments of Traders report showed Gold Managed Money traders added 9,132 contracts to their already long position and are now net long 272,302. Non-Commercial & Non-Reportable traders are net long 391,530 contracts after net selling 371 contracts.
Like the gold market, the silver market also appears to have found some value on the charts around the $18.00 level and we suspect the market will generally respect consolidation low pricing at $17.81.
Unfortunately, the net spec and fund long position in silver are also burdensome with the net long sitting within 24,000 contracts of the all-time record high. Silver positioning in the Commitments of Traders for the week ending January 7th showed Managed Money traders net sold 1,577 contracts and are now net long 58,788 contracts. Non-Commercial & Non-Reportable traders are net long 94,633 contracts after net selling 5,229 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.
