Senior Trader Update - Monday 8th May

Good morning everyone and I trust you had a pleasant weekend.
 
Quite a healthy range in XAU/AUD on Friday, effectively AUD 40.00 (+20 in Asia from 1656 to 1675 and then a complete reversal during European and US trading). The initial surge was on the back of AUD weakness resulting from commodity price weakness in iron ore, copper (and gold for that matter) as well as some USD strength with Republican Party managing to get a vote across the line for repealing and replacement of the Affordable Health Care Act aka ‘Obamacare’.
 
Investors however, were squarely focused on the US Bureau of Labor Statistics’ release of the monthly employment data with Non-Farm Payrolls for April coming in at a robust +211K jobs added (vs +190K expected) and the unemployment rate at +4.4% (vs +4.6% expected) - its lowest level since 2007.
 
The conclusion drawn by the markets from this was that the US Federal Reserve has now been given an irresistible reason for a June interest rate hike and consequently earlier gains in XAU/USD were reversed.
 
Friday’s CFTC Commitments of Traders release (as at May 2nd) showed:
 
·         Significant long liquidation in non-commercial speculative gold positioning (both Futures outright and Futures & Option combined) with net length reduced by over 1.1 mio ozs from the prior week’s report.
 
·         Significant long liquidation in non-commercial speculative silver positioning (both Futures outright and Futures & Option combined) combined with fresh shorts entering the market, reducing net length by approx. 113 mio ozs.
 
·         A significant shift to the short side in platinum as fresh speculative short entries pushed platinum approximately 0.5 mio ozs shorter.
 
·         Palladium remained in favour with investors as non-commercial speculative buying easily overwhelmed short selling, resulting in a net increase in long length of approximately 155K ozs.

We arrive this morning to the news that as expected by the punditry, 39-year old Emmanuel Macron has claimed the French Presidency with a 65%-35% defeat of the National Front’s Marine Le Pen (albeit on extremely low voter turnout). As a result we’ve seen a “Buy the rumour, sell the fact” move in the EUR/USD with the Eurozone currency unit weakening against the USD but (curiously?) both XAU/AUD and XAU/USD have rallied strongly early doors.
 
Technically, XAU/AUD continues to gravitate towards the Fibonacci retracements of the AUD 1578 to 1712.75 move. Respectively those are; AUD 1661.25 (38.2%), 1645.30 (50.0%) & 1629.40 (61.8%). XAU/USD has tested the 100 Day moving average at USD 1222.00/oz - the last line of defence ahead of the March 10th low at USD 1195.00/oz.
 
Finally, for the Gold/Silver ratio players, a technical ‘triple top’ (Wed through to Fri of last week) may see the unimpeded ascent halt at the 75.60 level and correct in the interim.
 
Have a great week ahead.
 
Regards,
Andre