Senior Trader Update 13 June 2017

Good morning everyone and I trust you enjoyed your long weekend.
 
Keeping it brief this morning, gold and silver are both weaker since we last convened in spite of a softer US Dollar Index and geopolitical tensions in the Middle East. In all likelihood the significant increase in long length as evidenced by the latest COTR data, triggered some speculative rebalancing / profit taking on Monday ahead of Wednesday’s FOMC announcement where it is anticipated that interest rates will be increased by the US central bank.
 
The focus of the week will be the meeting of the US central bank’s Federal Open Market Committee (FOMC) on Tuesday & Wednesday (with a monetary policy statement to follow at it’s conclusion), where market consensus expects that the Fed will move to raise its cash rate.
 
Elsewhere, gold has gained 7.3% against the British Pound since bottoming out on May 9th at GBP 939.00 (to trade as high as GBP 1007.50). Theresa May’s self-inflicted electoral headshot to the Tories saw their slim majority evaporate, forcing the Prime Minister to cobble together a coalition with Northern Ireland’s Democratic Unionist Party (DUP) in order to form government (as well as to maintain what many pundits believe to be her temporary grip on the Prime Ministership having run a disastrous campaign).
 
For those predisposed to the Wild-West of Bitcoin, the cryptocurrency shed a lazy 18.5% yesterday (chart attached). Store of value?
 
The latest CFTC Commitments of Traders Report (as at June 6th) showed:
 
·         A significant increase in commitments from the non-commercial speculative community in gold on both sides of the market but in the end, buying outweighed short-selling by almost 3:1, leading to a net increase in length on the long side of the market by approximately 4.2 million ozs (Futures and Options Combined)
 
·         A rush to the long side in silver by speculative accounts, adding a net 24.4 mio ozs in long length (Futures & Options Combined)
 
·         Platinum found favour amongst non-commercial speculative investors with long length accumulating and shortcovering also seen.
 
·         A squeeze in palladium inducing a significant backwardation ensured the the industrial metal remained the precious metals complex’s stellar performer. Net long length increase by approximately 325K ozs as prices surged throughout the week.

Technically, XAU/AUD has continued its descent beneath the 21 & 55 Day moving averages with support next seen around a cluster of lows made in early May near AUD 1650 (where the 100 Day moving average is also currently located). Should the market continue heading south then trendline support near AUD 1630 would likely be the last line of defence for XAU/AUD bulls. In XAU/USD terms, support presents at the 55 Day moving average (USD 1260), the 100 Day moving average (USD 1245) and the conjunction of the 200 Day moving average and major trendline support at USD 1238.
 
Good luck and have a great week ahead.
 
Regards,
Andre