Senior Trader Daily Update - 1st May

Good morning everyone and I trust you had a good weekend.
 
Sideways, range-trading was seen ahead of Friday’s US GDP data release but price action turned extremely volatile and choppy post GDP figures.
 
US GDP registered its weakest 1st Qtr result since 2014 at a +0.7% rise (vs +0.8% to +1.0% expected) due to a government cutback on defence spending according to the Commerce Department. 4th Qtr GDP came in at 2.1%
 
Gold finds itself caught in a tug-of-war between supportive sentiment derived from geopolitical / geotstrategic events and the negative sentiment driven by a generally strong US Dollar and a roaring equities market that presently shows no sign of abating (the Dow Jones Industrial Index flirting with record highs).
 
On the geopolitical front, the North Korean situation remains febrile and a (failed) missile test on Friday which saw a (non-ICBM) missile launched and self-destruct within North Korean territory, drew no military response from the US (thankfully). While the rhetoric from the protagonists (Norko & the US and its allies) remains intemperate, the US has shown a willingness to “give peace a chance” and to have the issue of the denuclearization of the Korean Peninsula resolved diplomatically with China being given the opportunity to lead the way (with the rider that US patience towards Norko is not inexhaustible).   
 
The latest CFTC Commitments of Traders data released on Friday (as at April 25th) showed:
 
·         A modest increase in non-commercial gold speculative long length of about 0.5 million ozs in the Futures only figures, as fresh longs exceeded fresh shorts but the Futures & Options combined data showed an overall reduction in net speculative long length for the first time in five weeks (of about 410K ozs), as fresh short positions exceeded fresh long positions due to the possibility of FOMC interest rate hikes and the likelihood of France’s ‘centrist’ Presidential candidate Emmanuel Macron winning the Presidency on May 7th.
 
·         Silver saw significant long liquidation and short selling amounting to about 51.4 million ozs (Futures only) and 55.2 million ozs (Futures & Options combined) which was borne out by the price action over the course of the reporting period.
 
·         Both Platinum Group Metals (PGM’s) saw modest long liquidation and short selling.

Gold ETFs experienced outflows for the fourth consecutive day on Thursday with a reduction in holdings of 8.2 tons while surprisingly, silver ETFs saw inflows totalling 171 tons (Tues – Thurs) sending holdings back over 20,000 tons.
 
Palladium at USD 820/oz is at its highest level since March 2015 with the platinum / palladium spread narrowing to just USD 120/oz (the narrowest in over 15 years).
 
The gold / silver ratio continues to advance as silver remains weak relative to gold for the aforementioned reasons.
 
Technically, XAU/AUD remains bound by resistance at the AUD 1710/1715 region and support at the top of the previous uptrend channel which comes in today at around AUD 1677. In USD terms, gold remains within the triangular congestion region and the consolidation within the USD 1245 – 1265 zone may have completed for the moment with gold bulls now in a position to make a fresh assault on the MAJOR trendline resistance which today is located at USD 1284 and if penetrated, on to the psychologically important USD 1300.00 level eventually.
 
Have a great week ahead,
 
Kind regards,
Andre