Senior Trader Update 31 May 2017

Good morning everyone.
 
Precious metals bulls (those of them at their desks with Chinese, UK and US investors absent) managed to press their advantage in thin market conditions during Far Eastern trading, as the complex picked up what appears to have been a ‘flight to quality’ bid (in conjunction with the US dollar) on the back of investor jitters in relation to newswire stories canvassing a potential Greek debt default.
 
As noted in yesterdays commentary, it was always going to require the resumption of full market liquidity resulting from the return of UK and US investors to validate Friday’s ascent in the metals.
 
The resounding verdict delivered at the commencement of European trading (and which was to continue into US trading) was that the surge higher was technical in nature (shortcovering / booksquaring ahead of a long weekend in thin liquidity) and consequently gold and silver rolled over and surrendered about half of their gains, platinum erased the entirety of its gains from Friday, while palladium bucked the sentiment and remained bid throughout Tuesday’s trading.
 
Attention should now turn to the release of monthly employment data from the US on Friday (and the potential impact on the US Federal Reserve’s monetary policy announcement scheduled for June).
 
From Europe, investor nervousness has been triggered by the tarot-card reading pollsters who are suggesting that the upcoming British election on June 8th may result in a hung parliament (the same prediction they made for the 2015 General Election which ultimately saw the Conservatives obtain a comfortable majority). The Greek debt situation will continue to remain closely monitored by the markets.
 
Technically, with XAU/AUD trading up to a tick over AUD 1710 before rolling over, a technical “double-top” was put in place on the Daily charts. Thus, AUD 1700/1710 for the moment remains intact as a formidable technical resistance zone and the broader XAU/AUD AUD 1650 - 1710 range remains unbroken.  
 
The XAU/USD Daily price action remains contained within a triangular congestion region (with trendline support pegged at USD 1229 & trendline resistance at USD 1275 for today). Momentum buying or momentum selling is likely to ensue depending on which side of the congestion region gold eventually breaks out from.
 
Good luck.
 
Regards,
Andre