Gold and silver prices have started the holiday-shortened US trading week out on a positive footing with prices reaching 10-day highs in April gold and March silver. With world equity markets lower and fears global economic headwind fears expanding from the aggressive tactics needed to contain/battle the virus, it is not surprising that gold and silver have managed to extend last week's rally.
In fact, headlines are rife with notices of global conferences being canceled, Apple has stirred fears with revenue warnings and a number of global companies are expressing concern about production problems due to supply chain disruptions. The gold trade is also aware of Chinese efforts to bring their economy through the current historical disruption with historical measures designed to provide stimulus and liquidity especially with those efforts mirrored by other central banks in the global community.
While not a major and instant spark for the bull camp, gold ETF holdings posted a 19th straight day of inflows bringing net purchases this year up to 2.1 million ounces. Furthermore, the press overnight has made note of increased "popularity" of gold exchange-traded funds in India and that should not be discounted as that could be a very significant demand influence on international gold prices.
In fact, in the month of January gold ETFs in India registered the highest monthly jump in gold asset holdings since the January 2013 record. More importantly, it should be noted that the net holdings of gold ETF's in India stood at roughly 62 billion rupees but that is only half of the record holdings of Indian Gold EFT of 120 billion seen in 2013! Therefore despite the relatively expensive gold in terms of rupee pricing, Indian buyers seemingly retain significant capacity and interest.
Apparently, the gold market is not hindered by another higher high for the move in the dollar index which has now reached the highest level since September 2019. Clearly, the gold trade is also un-interested in news of a noted half year gold production increase from Pan-African Resources PLC perhaps because the net output gain was only 11,000 ounces over similar year-ago figures.
While the gold net spec and fund long positioning is already lofty and is probably understated by the rallies since the last report was measured it remains 43,000 contracts below the record all-time high and therefore the market probably retains speculative buying capacity.
Gold positioning in the Commitments of Traders for the week ending February 11th showed Managed Money traders are net-long 229,369 contracts after net buying 17,876 contracts. Non-Commercial & Non-Reportable traders are net-long 358,274 contracts after net buying 13,486 contracts.
While the silver market looks to follow gold higher today it is held back slightly by a number of negative physical commodity market demand forecasts which have predicted lower industrial commodity prices directly ahead but a long sustained recovery in industrial prices later on once the virus is contained.
Silver positioning in the Commitments of Traders for the week ending February 11th showed Managed Money traders reduced their net long position by 829 contracts to a net long 56,011 contracts. Non-Commercial & Non-Reportable traders net bought 782 contracts and are now net long 93,514 contracts.
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.
