Senior Trader Update 16th May 2017

Good morning everyone,

Gold and silver were firmer as the week commenced and perhaps it was no great surprise, as a cursory glance at the latest CFTC Commitments of Traders Report (as at May 9th) showed significant length had come out of both metals with long liquidation continuing unabated over the course of the reporting week. Also supporting precious metals prices on Monday was a softer US Dollar Index.

As per the COTR:

Heavy long liquidation was seen in non-commercial speculative positioning (in gold futures outright & futures & options combined) as the markets took the view that a June FOMC rate hike was a near certainty and as receding geopolitical tensions pulled the rug out from under bullish interests, with the capitulation of some major downside technical levels also adding momentum to the selling.

Silver was a somewhat different beast as the COTR showed not only long liquidation but substantial shortselling, leaving the market vulnerable to a shortsqueeze / ‘bear trap’.

Heavy shortselling was seen in platinum but fresh long speculative interest was also initiated as platinum put in a ‘triple bottom’ at the USD 900.00 level.

Modest long liquidation was seen in palladium but compared with the rest of the complex the industrial metal was left relatively unscathed.

Technically, XAU/AUD continues to find support above the 55 & 200 Day moving averages as well as above the 50% & 61.8% Fibonacci retracements of the AUD 1578 to 1712.75 move (respectively those are; 1645.30 (50.0%) & 1629.40 (61.8%)).

XAU/USD stayed away from the psychological ‘big figure’ at USD 1200.00/oz and the March 10th low at USD 1195.00/oz on shortcovering and mean-reversion but any rally is likely to be thwarted initially at the 55 & 200 Day moving averages both located at USD 1245.

After pressing up just beneath the 76.00 level for much of last week, the Gold/Silver ratio finally ‘rolled over’.

The (inverse) USD/JPY & XAU/USD correlation remains strong.

Good luck.

Regards,

Andre