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Gold Continues to Wander

Gold Continues to Wander  

Commentary for Monday, April 1, 2019 – Gold closed down $4.60 at $1288.40. I think the best you can say about gold at this point is that it is steady – even in the longer term. The 30 day price picture is about unchanged and the 1 year price picture is down about $30.00.

The more recent “feel” is that international markets are less strained which is good but this could change in a blink considering that any final deal with China is still a long way off.

Why this better frame of mind is not turning into higher safe haven demand is not clear. This could be the result of a stronger dollar – the Dollar Index has moved from 96.5 through 97.3 these past 5 trading days.  

Today’s gold close ($1288.40) compared to the moving averages looks like this: 50 DMA ($1308.00) 100 DMA ($1281.00) and 200 DMA ($1248.00). So the price of gold is below the 50 and above both the 100 and 200 – hanging in there for now. And while safe-haven demand seems perhaps soft – perhaps because stocks are rallying – most thinkers believe gold bullion will play a more central role in portfolio management this coming year.

More importantly I think this change in thinking will increase as time goes on and folks realize that government debt is not going to be checked and in fact will continue to grow even though many claim the number is already high enough to sink the boat.

This is not only true of the US but other countries across the board – no one wants to tell the tax payer that tax dollars are being dissipated through mismanagement and fraud. So the charade continues here in the US and both parties play a role which should be an embarrassment to all.

For now watch the $1280.00 support line and the dollar. If the greenback moves higher gold will soften but if the $1280.00 support is breached traders will play the “short” side and everyone will be looking for bargain hunting.   

This from Zaner (Chicago) – “While the gold market showed some recovery action last week after an aggressive four day washout, the bear camp looks to generally retain control. First and foremost, the track in the dollar generally looks to remain up despite disappointing data and repeated dovish Fed mumblings. As we indicated a number of times last week, we think gold, silver and platinum might become industrial/physical demand focused markets, not financial safe haven instruments. However, better than expected Chinese economic data over the weekend and higher global equities has not resulted in strength in gold and silver early this morning and that partially defeats the physical demand angle. However, the market was presented with bullish supply and demand forecast figures released in the press overnight with a private entity predicting gold demand this year will reach the highest levels in four years. Fortunately for the bull camp, the net spec long positioning in gold was very modest and clearly overstated given that prices following the report declined by $29 from the COT report mark off. The Commitments of Traders report for the week ending March 26th showed Gold Managed Money traders added 22,011 contracts to their already long position and are now net long 79,757. Non-Commercial & Non-Reportable traders net bought 28,242 contracts and are now net long 170,148 contracts. Like the gold market, the silver market severely damaged its charts but has in retrospect showed some potential value at the $15.00 level. With the silver market not showing open interest liquidation last week, (on the break down) that casts some doubt the argument that last week’s washout has balanced the charts. However, following the COT positioning report, May silver fell an additional $0.47 and the $15.00 level has been a key pivot point for the market on a very consistent basis since last August! However, we see silver as a classic industrial/physical demand focused market and therefore a measure of positive correlation to equities is likely this week. The March 26th Commitments of Traders report showed Silver Managed Money traders added 2,267 contracts to their already long position and are now net long 12,261. Non-Commercial & Non-Reportable traders are net long 49,000 contracts after net buying 5,558 contracts.

The palladium market suffered historical damage on its charts last week, and the declines were such that the multi-quarter bull market has been severely challenged. So far, open interest has liquidated but not significantly and volume last week was very high and that probably means some weak-handed longs have been pushed to the sidelines. However, the most recent positioning report in palladium showed a net spec long of only 12,000 contracts and that reading is certainly overstated given the decline of $212 an ounce since the report was compiled. The March 26th Commitments of Traders report showed Palladium Managed Money traders net sold 265 contracts and were net long 12,536 contracts. Non-Commercial & Non-Reportable traders were net long 12,336 contracts after decreasing their long position by 743 contracts. At least to start, the $1,308 level could be a key psychological point but without a definitive improvement in global economic psychology and perhaps positive trade headlines, we can’t rule out a temporary test of $1,276 in June palladium this week. In the end, expanded volatility could become a fixture. Platinum positioning in the Commitments of Traders for the week ending March 26th showed Managed Money traders are net long 11,445 contracts after net buying 8,351 contracts. Non-Commercial & Non-Reportable traders added 4,475 contracts to their already long position and are now net long 31,451.

While it is possible that gold, silver, platinum and palladium found temporary lows with last week’s sharp washouts it could take a definitive slide in the Dollar to avoid further downside work this week. Therefore, pushed into the market we leave the bear camp with an edge as the dollar generally looks to be upwardly biased on its charts and economic conditions are still a little suspect. Pivot point support in June gold is seen at $1,293.30 and then again down at $1,291.30.”

Silver closed down $0.01 at $15.05.

Platinum closed up $1.20 at $850.10 and palladium closed up $50.00 at $1395.00.

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