Blog posts tagged with 'copper'

While the net spec and fund long in gold (adjusted for the $30 rally into Friday's high) suggest the market is heavily overbought, we suspect technical signals will take a backseat to classic flight to quality headline news flow.

However, with the post-COT report rally, the net spec and fund long in gold is likely the longest in two years, and therefore any sign of a cease-fire between Israel and Hamas could result in a massive correction.

Gold positioning in the Commitments of Traders for the week ending April 23rd showed Managed Money traders net bought 3,296 contracts and are now net long 176,157 contracts...[MORE]

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Once again noted strength in gold and silver prices appears to be taking place in a vacuum, with little change in US interest rates, the dollar, and energy prices overnight.

However, the bull camp is likely benefiting from a surprise jump in Chinese first-quarter gold consumption which increased by 5.9% from year-ago levels.

Apparently, mainland China's March gold imports through Hong Kong increased by 40% from February giving credence to news earlier this month that Chinese investors were seeking to hold gold to avoid weakness in the domestic currency...[MORE]

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With the gold market over the last 72 hours settling within a range bound by $2350 and $2300, it is possible that some form of value has been found ahead of what is likely to be a key fork in the road for prices.

Fortunately for the bull camp, the dollar is showing signs of tracking lower this morning as the aggressive liquidation this week has clearly rocked the bull camp back on its heels.

While the February to April rallies in gold and silver were not fueled by definitive inflows to ETF holdings, both gold and silver holdings continue to decline in a sign that small investors have not been enticed by the second half of April setback...[MORE]

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In retrospect, the gold trade was unsure of the primary source of the massive April upside extension of the historic gold rally which began early last October.

While the trade remains vulnerable to additional stop-loss selling today from very large net spec and fund positioning, further extraction of war premium is also expected with the gold futures and options positioning (adjusted into the recent highs) likely at three year highs!

However, Bloomberg overnight carried a story suggesting a large portion of the gold rally was sparked by aggressive buying at the Shanghai futures exchange...[MORE]

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The capitulation in gold and silver extended overnight with what we think is mostly stop-loss selling from the massive net long built up from the $425 gold rally off the February low and the $7.50 rally in July silver.

However, ongoing liquidation of flight to quality longs from lower ME angst is certainly adding to the washout while typical outside market influences of the dollar and treasury yields have not been a noted influence and are unlikely to be a key impact today.

In retrospect, there was apparently more flight to quality longs in off the potential for a widespread Middle East war than expected and that should be remembered if conflict returns...[MORE]

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The vibe in the Middle East seems to suggest that the "tit-for-tat" fighting between Israel and Iran will pause has obviously punctured bullish sentiment in gold and silver. Therefore, the focus of gold and silver is likely to shift back to action in the dollar and US treasury yields.

While silver ETF holdings continue to decline very rapidly, gold ETF holdings declines are less significant. Last week gold ETF holdings declined by 478,713 ounces, while silver ETF holdings declined by 22.8 million!

Even though we suspect the Chinese central bank will continue to add to reserves (following 17 straight months of purchases) we suspect lower prices will have only a marginal impact on the size of Chinese Central Bank purchases...[MORE]

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The big question for the gold trade now is will the tensions between Israel and Iran cool and temporarily end the potential for sudden massive geopolitical-inspired flight to quality buying?

While not a major bearish development gold and silver ETF holdings continue to decline with the declines in gold and silver ETF holdings very significant yesterday (Gold -218,995 ounces & Silver -6.3 ml ounces).

Even the technical picture has shifted in favor of the bear camp with the overnight spike-up move squarely rejected...[MORE]

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Despite a chorus of hawkish (less dovish) global central bank dialogue flowing from the IMF meeting, gold and silver prices are tracking higher perhaps because of slightly supportive outside market action in US treasuries and the dollar.

However, a new concern may be rising in the marketplace as significant declines in Japanese and South Korean currencies were acknowledged by the US Treasury Secretary at the IMF meeting with the US, Japan, and South Korean officials agreeing on the need to monitor and consult with other central banks on the situation.

Not surprisingly, the IMF dialogue has resulted in a downside extension in the US dollar this morning which could be the primary source of the gold and silver rebounds.

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The bias in gold remains up despite negative divergence with silver prices and news of continued outflows from gold and silver ETF holdings.

However, yesterday gold impressively managed gains despite another significant extension of upside action in the dollar and in the face of another higher high in US treasury yields.

There are some discussions in the marketplace that some form of crisis is ahead because of the unrelenting gold market gains and the only other major market reaction to a looming global flight to quality event is the surging US dollar...[MORE]

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While the dollar has retrenched from a fresh spike up new high for the move this morning, the bias in the dollar remains up to start today.

However, soft US housing data could provide a brief respite from the strong dollar for gold and silver longs this morning.

Unfortunately for the bull camp gold and silver ETF holdings continue to decline highlighting a lack of small investor interest in one niche of the metal markets.

On the other hand, Citi has doubled down on its bullish gold price forecast projecting gold to reach $3000 in the next 6 to 18 months...[MORE]

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