Senior Trader Daily Update 07 August 2017

Good morning everyone and I trust you had a good weekend.
 
The long and short of trading on Friday was that gold and silver had the wind knocked out of their sails somewhat as the week concluded, when much better than expected employment data from the US Bureau of Labor Statistics hit the wires. The headline Non-Farm Payrolls figure for July came in at +209,000 jobs added (vs +180,000 expected) with the Unemployment Rate falling to 4.3% as expected (vs 4.4% the previous month).
 
Not surprisingly the Greenback surged against the majors (EUR, JPY, AUD), driving the US Dollar Index higher. The Dow Jones Index also continued advancing to record highs. Consequently, precious metals were driven lower - arguably a necessary speculative rebalancing in view of the latest CFTC Commitments of Traders Report (as at August 1st) which showed a significant surge back to the long side by non-commercial accounts.
 
The latest CFTC Commitments of Traders Report (as at August 1st) showed:

• Heavy short-covering from non-commercial speculative gold accounts continuing for a successive week with an almost 2 mio ozs reduction in short side commitments matched by a 2.5 million ozs increase in long exposure (Futures & Options Combined), leading to a large net change in positioning of 4.3 mio ozs (Futures & Options Combined).

• Silver non-commercial speculative short covering exceeded fresh buying by an almost 5:1 ratio to the week ended August 1st, resulting in a net change in positioning north of 50 mio ozs.

• The Platinum Group Metals found friends with speculative net positioning increasing respectably to the week ended August 1st.

Technically, Friday’s retreat in XAU/AUD halted at the trendline support but in early Far Eastern trade this morning there has been follow through downside pressure, causing the trendline to be penetrated. Support on dips back towards the mid AUD 1570’s is still favoured however and the Fibonacci retracement targets at AUD 1619.50 (38.2%) & AUD 1640.25 (50.0%) (of the AUD 1728 to 1552.50 down move between June 6th and July 20th) remain in play for the time being.
 
Mean-reversion back towards the 55 & 100 Day moving averages (USD 1252) in XAU/USD resulted from Friday’s US employment data release and initial support there is likely. Beneath that lies the conjunction of the 38.2% Fibonacci retracement at USD 1247.65 (of the USD 1204.70 to 1274.20 move) and the 21 Day moving average.
 
Good luck and have a good week ahead.
 
Regards,
Andre