Market Updates

Ladders and snakes – ladders give, snakes take. Gold and silver gave up the entirety (and a touch more) of Wednesday’s gains yesterday, as expectations of the US and its allies raining down a shower of missiles from the skies over Syria, failed to materialise. The slightly inconvenient requirement for facts and evidence to emerge before pursuing such a grave course of action, perhaps staying the hand of the war hawks for now. That notwithstanding, the United States, the UK and France continue to assemble their military hardware in the region as President Trump pursues his “Twitter Diplomacy”, Tweeting overnight that; “Never said when an attack on Syria would take place. Could be very soon or not so soon at all! In any event, the United States, under my Administration, has done a great job of ridding the region of ISIS. Where is our “Thank you America?”

Gold prices pulled back sharply overnight, with the yellow metal declining back toward USD $1330oz. Earlier in the week, gold had briefly pushed through USD $1360oz, though couldn’t hold onto this important level, and is now essentially unchanged over the past seven trading days, despite the alarming developments in Syria and continued uncertainty re US trade policy.

Safe haven buying on the back of unfolding developments from the Middle East had kept a steady bid tone to the precious metals throughout Asian and European trading as expectations mounted of military action in response to recent alleged events in Syria.  It was an early morning (US) Tweet from US President Trump however, that lit the wick under gold and silver, propelling them towards significant technical resistance levels.

When the newswires carried comments from Chinese President Xi Jinping during the early part of Far Eastern trading that China was prepared to lower tariffs on motor vehicles and motor vehicle related products, in addition to lowering foreign ownership restrictions - effectively dissipating the heat out from the recent trade war rhetoric, stock futures rallied, the AUD rallied hard against the Greenback, XAU/USD drifted lower and XAU/AUD was crushed from AUD 1737 down to AUD 1725 in quick time.

Hello everyone.
 
COMMENTS / HIGHLIGHTS:

• Markets were driven hither and yon in thin Far Eastern trade on Friday (Shanghai closed for the Tomb Sweeping public holiday) as US President Trump continued aggressively pursuing policies intended to redress the United States’ $500 billion trade deficit with China, this time in the form of firing additional trade war salvos (“In light of China’s unfair retaliation, I have instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs”)

• The Greenback and US equity indexes weakened on the back of the news, while precious metals marched higher.

• Gains were quickly pared as end-of-week position squaring and profit taking commenced from the middle of the Far Eastern trading session right up until the all-important US Bureau of Labor Statistics’ employment data release for March.

Precious metal prices have had a minor rally this week, with the price of gold currently sitting at USD $1,331oz.
 
In AUD terms, gold is sitting at $1,737oz, up nearly 1% for the week, with the metals still largely range bound, as they have been for some time.

Gold takes support from the Weekly Ichimoku Standard Line (US$1301) but has yet to overcome the important US$1366 level. Protectionism is the theme for gold’s current strength after Chinese retaliation over 128 mainly agricultural imports from the US.

Targets: medium term look for US$1382 still, then US$1389 basis shorter-term point and Figure targets. A break of the recent highs also suggests US$1410-1420 basis the sideways trading seen since the end of January. Above, US$1360, recent downside targets will disappear.

Gold prices have bounced this week, with the yellow metal currently trading just over USD $1,330oz, up over 1.5% since last Friday. In Australian dollar terms, the yellow metal has pushed decisively through the AUD $1,700oz mark, currently trading at AUD $1,736oz, whilst silver is trading at AUD $21.50oz, with the local currency under pressure.

The biggest news of the week was of course the US Federal Reserve (Fed) rate hike, which the market had more than priced in ahead of time, with gold rallying in spite of the tighter policy conditions.

The Australian Bureau of Statistics yesterday released its latest housing statistics, which showed that, nationwide, property prices rose by 1% in the final quarter of 2017.

“Bull Markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria.” – Sir John Templeton

Gold prices are treading water this week, currently trading at USD $1,316oz, whilst silver is just below USD $16.50oz. For local investors, prices are sitting at AUD $1,692oz for gold and AUD $21.16 for silver, with the currency sitting just below USD $0.78.

After hitting the US$1361 target, gold tested the US$1301 support at the Weekly Standard line on the Ichimoku/the base of the Daily cloud, and recovers.

Targets: medium term look for US$1372. Short term the market is vulnerable to weaken off to US$1300 again.

Support comes in at US$1301 from the weekly Ichimoku Standard Line. Resistance lies at US$1332-34 and US$1366.

CME positioning reveals another decline in gross Managed Money length of almost 0.50 million Ftozs. Shorts reduced by 0.57 million. Trading in the week of the 27th February to the 6th of March took place at a VWAP of US$1321.64, and since the 6th, open interest in the April and June contracts has contracted by about 1.85 million FTozs, suggesting more long liquidation took place.

Precious metal prices are on track to end this week largely unchanged, having pulled back from mid-week highs. Gold is currently trading at USD $1318oz, where silver is at USD $16.52 and in Australian dollars, gold is at AUD $1693 whilst silver is trading just above AUD $21oz.

Hello everyone,
 
Where to begin?
 
Markets have been roiled over the past few days by a handful of events but arguably the one causing the most consternation amongst investors being the announcement last Friday by President Trump of his intention to apply across the board tariffs of 25% on imported steel and 10% on imported aluminium on the grounds of ‘national security’.  Appeals from US allies and from some members within his Administration to desist, as well as threats of retaliation from some trading partners (the EU) and the attendant hue and cry of “Trade Wars” from the usual suspects in the media, somewhat belie the fact that US interests are already subject to tariffs in various jurisdictions (e.g. the European Union applies a 10% tariff to US vehicles vs the 2.5% tariff applied to European automobiles imported into the USA). All this notwithstanding, the “Trade Wars / Tariffs” issue claimed its first scalp today with the announcement this morning at the commencement of trading in the Far East that President Trump’s senior economic adviser, Gary Cohn has handed in his resignation and is to leave the White House (Mr Cohn unable to reconcile his avowedly anti-protectionist views with the US President’s ‘America First’ agenda).

Gold and silver continued their pullback this week, with the price of the metals declining to USD $1315oz (gold), and USD $16.50oz (silver). Overnight, the yellow metal fell as low as USD $1305oz, though it found solid support at this level, and essentially finished unchanged for the day.

A decline in the AUD has supported prices in Australian dollar terms, with the AUD price of gold, currently sitting just below AUD $1700oz, essentially flat for the week. Silver is also steady, currently trading at AUD $21.30oz, with the gold to silver ratio (GSR) still sitting at around 80:1.

Hello everyone.
 
The markets’ verdict on the prepared Testimony and subsequent Q&A of US Federal Reserve Chairman Jerome Powell before the House Financial Services Committee, came down on the side of “hawkish”.

​Hello everyone.
 
Precious metals commenced the week with price action driven by the US dollar which itself was hoofed around like a football, initially on comments from Bank of Japan Governor Kuroda during early Far Eastern trading that the: “BOJ will persistently continue powerful monetary easing” and “Japan's economy needs persistent monetary easing” and then by comments during European trading from European Central Bank President Draghi that "there's no currency wars".

Gold prices have corrected slightly this week, with the price of the yellow metal falling 1.5% to the USD $1330oz level. Silver has been affected too, with a similar fall bringing prices back toward USD $16.50oz.

A slight rally in the USD is partly to blame for the decline, though there is no shortage of supportive factors for gold, with asset managers including Blackrock increasing their exposure, whilst ETF holdings for both gold and silver have risen, suggesting this minor pullback has been treated as a buying opportunity.

​Chinese New Year and US Presidents Day holidays have impacted market liquidity during the early part of this week.

The return of US investors on Tuesday saw the precious metals driven lower and in the absence of anything significant of note to canvas, I’ll let the pictures tell the tale as follows:

1. Stronger US Dollar Index as the Greenback rallied against its major pairs

2. Firm US 10 Year Treasury yields

3. Stronger US Dollar / Weaker Euro

4. Stronger US Dollar / Weaker JPY

5. Lower DJIA

6. Lower XAU in USD
   & 7) Lower XAU in AUD

Precious metal prices have rallied this week, with both gold and silver up by close to 3% in USD terms, trading at USD $1354oz (gold), and USD $16.96oz (silver). In local currency terms, the yellow metal has again pushed back above AUD $1700oz, whilst silver is now trading at AUD $21.35oz.

The catalyst for the move was a US inflation print which came in higher than expected (more on this below). This figure came out on the same day we also saw a very soft retail sales figure, which came in at -0.3% for the month, with gold rallying , and the dollar weakening substantially in the aftermath.

Hello everyone.
 
Since the last missive a week ago, extremely choppy ‘rinse and spin’ price action has been seen across the precious metals complex (particularly gold), as investors were driven hither and yon by volatility across US equity markets.
 
Yesterday proved no exception.

To bastardise Hemingway, Jacob Zuma’s political demise appears to have come about “slowly, then all at once”. Years of the ANC governing as the party of liberation, and then the party of failed promise tainted with corruption and little to offer the South African in the street, have forced change at the top.

Given South Africa’s dominance of world platinum supplies, mining an estimated 4.38 million Tozs in 2017, or around 70 pct of world mine supply, how do we think that these political developments will affect platinum and palladium and are there other factors that compete with the South African situation that need to be considered?

Precious metal prices have held their ground this week, with the price of gold in AUD again challenging $1700oz, whilst silver in AUD is trading above $21oz.

Australian investors in the metals space have been buoyed by a decline in the value of the AUD, which has fallen to USD $0.78, as stabilisation in the greenback, and a continued run of soft economic data in Australia dampens market enthusiasm for a rate hike in 2018.

Hello everyone.
 
Precious metals remained under the cosh on Wednesday as the Dow Jones Industrial Average recouped 1,500 of the (approximately) 2,200 points it had shed since last Friday and as the US Dollar continued to find its feet against the “majors” (Euro, JPY and AUD).

Hello everyone.
 
“Ladders and snakes. Ladders give, snakes take.”
 
The ongoing carnage in US equity markets (and associated volatility indexes like the VIX and the XIV) on Tuesday, roiled precious metals markets. Gold and silver surged higher during Far Eastern and early European trade on the back of the algorithmically driven abyss into which equities had precipitously plunged since Friday, only to “turn turtle” and surrender gains made since the commencement of trading this week in their entirety, as stocks surged back when US investors arrived.