Precious Metals News Update - 7 February 2018

Hello everyone.
 
“Ladders and snakes. Ladders give, snakes take.”
 
The ongoing carnage in US equity markets (and associated volatility indexes like the VIX and the XIV) on Tuesday, roiled precious metals markets. Gold and silver surged higher during Far Eastern and early European trade on the back of the algorithmically driven abyss into which equities had precipitously plunged since Friday, only to “turn turtle” and surrender gains made since the commencement of trading this week in their entirety, as stocks surged back when US investors arrived.
 
A picture is worth a thousand words, so I’ll let the attached graphs of intraday price action in the S&P futures and gold yesterday, speak for themselves.
 
Elsewhere, the World Gold Council released global demand data for Quarter 4 and for the whole of 2017 (attached).
 
From the World Gold Council’s website:
 
“The key findings included in the Gold Demand Trends Full Year 2017 report are as follows:
 
Full Year 2017 figures:

• Overall demand for FY 2017 was 4,072t, a fall of 7% compared with 4,362t in 2016

• Total consumer demand in FY 2017 rose by 2% to 3,165t, from 3,102t in 2016

• Total investment demand fell 23% to 1,232t in FY 2017 from 1,595t in 2016

• Global jewellery demand grew 4% to 2,136t, from 2,054t in the same period last year

• Central bank demand was 371t, down 5% compared with 390t in 2016

• Demand in the technology sector increased by 3% to 333t from 323t in 2016

• Total supply was down 4% to 4,398t, from 4,591t during 2016

• Recycling fell 10% to 1,160t compared with 1,295t in 2016

• Mine production inched to a record high of 3,269t in 2017, while recycling fell 10%, leading to total supply dipping 4% to 4,398t.”

Technically, XAUU/AUD advanced aggressively during Far Eastern trading into the AUD 1710.00 /1715.00 region flagged in yesterday’s comment but has posted a very ugly, very bearish “One Day Reversal / Blow off Top” candlestick on the daily chart (an advance to a fresh high followed by a reversal and close below the previous day’s low). Downside follow through should likely see gold drop into the AUD 1650/1670 zone (the 55 & 200 day moving averages respectively).
 
XAU/USD pushed towards USD 1350 resistance during the Far Eastern session (halting at USD 1346) before dropping to the lower end of the range at USD 1325 and the close below the 21 Day moving average looks like the market may have “rolled over”, increasing the probability of a trek lower back towards USD 1300.00. That said, any rallies back towards USD 1335.00 are likely to be capped and Fibonacci retracements of the mid-December to late January move from USD 1236.50 to USD 1366 are now in play. Specifically, those are: USD 1316.65 (38.2%), USD 1301.30 (50%) and USD 1286.00 (61.8%).
 
Good luck.
 
Regards,
Andre