Senior Trader Update 5 June 2017

Good morning everyone. I trust you had a good weekend.
 
Having drifted lower throughout Asian trading on Friday before a positon-squaring bounce into the European session, gold was spurred higher by a worse than expected Non-Farm Payrolls figure from the Bureau of Labor Statistics in the US.
 
May Non-Farm Payrolls came in at +138K (vs +180K expected, whilst NFP’s for April were also revised lower by 37K). Consequently, the US Dollar weakened, US treasuries rallied and the precious metals complex spiked higher as investors reasoned that while a rate tightening by the US Federal Reserve at its June meeting remains on the cards, further monetary policy tightening throughout the year was decidedly less likely. Peculiarly, US equity markets remained buoyant in spite of the headline employment figure.
 
Further strength has been seen at the open in pre-market trade this morning, on the back of the appalling events in central London on Saturday evening which justifiably has received saturation coverage elsewhere and requires no further comment here. What does merit comment however, is the effect this will have on this Thursday’s UK General Election. The Theresa May led Conservatives were seemingly headed for an increased majority when the snap poll was called but the polls have tightened considerably (for whatever they are worth) over the course of the campaign and now, the impact Saturday’s attack will have on the outcome is anyone’s guess - hence the ‘safe-haven’ bid that the metals have acquired this morning in early trade.
 
Technically, both XAU/AUD & XAU/USD have moved beyond significant technical barriers and it now remains to be seen whether precious metals bulls have the momentum behind them to further the advance. In XAU/AUD terms, the way remains opens to the early November high at 1760 while XAU/USD will have its sights set on the mid-April high at USD 1295.50 (and then the psychological ‘big-figure’ at USD 1300).
 
Friday’s release of the weekly CFTC Commitments of Traders data (as at May 30th) showed;
 
·         Non-commercial gold speculative buying exceeded short-selling by a ratio of 7:1 (Futures & Options Combined) over the course of the week. Net long length increasing by approximately 1.2 mio ozs as various data releases created uncertainty in relation to the US FOMC’s monetary policy announcement later this month.
 
·         Silver’s rally was entirely short-covering. Buying interest was next-to-nothing whilst short positioning was significantly reduced by approximately 50 million ounces.
 
·         Platinum non-commercial speculative accounts pared back positioning with both long and short exposures reduced.
 
·         Palladium saw a modest increase in non-commercial speculative long length of approximately 40,000 ozs.

Finally, Platts reported that Indian gold prices were trading at a discount to world market prices for the first time in six weeks during the middle of last week. India will be rolling out a new 3% nationwide sales tax on gold and gold jewellery as soon as July 1, this according to the country’s GST Council, which met during the weekend to finalize the numbers.
 
Good luck and have a good week ahead.
 
Regards,
Andre