Good morning everyone and I trust you had a good weekend.
 
Well, gold and silver surged higher on Friday and I must admit I am at a bit of a loss as to the reason(s) why.
 
It’s probably best to lay out a few points of interest but it would be drawing a very long bow to suggest that any of them were compelling reasons for the surge in precious metals.
 
Firstly, today is a long weekend in both the UK (Spring Bank Holiday) and the US (Memorial Day). It is quite possible that any booksquaring or buying as insurance against geopolitical developments arising when the markets are closed, was greatly amplified due to liquidity draining away ahead of the long weekend.
 
Looking at market correlations, the US Dollar Index rallied and finished near its day’s highs (normally this would weigh on precious metals values) and US equity indexes, whilst tracking sideways, also loitered near recent highs (again, a factor that would generally weigh upon precious metals values).
 
It is possible that some investors were positioning for what is presently the contrarian trade, that the US Federal Reserve contrary to market consensus, will not hike rates at the June FOMC meeting in a few weeks.
 
Drawing a really long bow, the US press were carrying story’s the President Trump’s son-in-law was under FBI investigation for potential connections to “The Russians” (a potential cause of instability within the Trump Administration).
 
On the economic data release front from the US, April Durable Goods Orders fell by 0.7% to $231.2 billion (vs -1.1% expected), the May University of Michigan sentiment index (final) was revised down to 97.1 (vs 97.5 expected and vs 97.7 preliminary and 97.0 in April).
 
Finally (and I’ve been reticent to draw attention to it, however it’s been receiving a lot of press), the cryptocurrency Bitcoin which had surged to record highs at USD 2,779, saw 10% of its ‘value’ erased on Friday (Daily chart going back 2 years attached, illustrating the recent parabolic move). Whilst there is no doubt that Bitcoin has gained considerable traction as a medium of exchange, it would be hard to argue the case for ‘store of value’ on the back of 10% reversals intraday.
 
Turning to the latest CFTC Commitments of Traders (as at May 23rd);
 
·         Gold non-commercial speculative longs returned to the market in numbers as short speculative positioning was reduced - a net change in length of almost 4 mio ozs (Futures & Options Combined). This was likely due to the latest FOMC Minutes giving investors pause for thought regarding the prospect of a June interest rate hike. Also supportive, the near daily confusion surrounding investigations, allegations, claims and denials in relation to the Trump Administration.
 
·         Silver non-commercial speculative positioning saw long liquidation but it was overwhelming shortcovering that provided the bounce in the white metal.
 
·         Similarly, platinum saw long liquidation from the non-commercial speculative community but this was also overwhelmed by shortcovering which bolstered values.
 
·         Long liquidation characterised the shift in palladium non-commercial speculative positioning with some modest shortcovering evident.

Good morning everyone and Happy Friday.
 
A mixed bag in precious metals as at the close of business in New York on Thursday.
 
XAU/AUD & XAG/AUD closed firmer, bolstered purely by Aussie dollar weakness as both metals managed to rally in AUD terms in the face of a stronger USD Index and higher US equity markets. The reason for the Aussie dollar weakness was likely the AUD’s reaction (as a perceived ‘commodity currency’) to the precipitous 5.7% drop in crude oil overnight (see intraday chart attached), which was administered the “baby seal treatment” by speculators stemming from investor displeasure with OPEC’s (and its partners’) decision to extend production cuts for only nine more months instead of the far deeper cuts anticipated. OPEC announced that no new non-OPEC members will join the global supply reduction deal and it would maintain production cuts of 1.8 mio bpd as agreed in late November 2016. And in a nutshell, that about covers it.

ABC Bullion cements leadership position in global bullion market with full LBMA membership

Good morning everyone.
 
Choppy, sideways trade within a comparatively narrow range was seen yesterday in XAU/AUD with a firming Aussie dollar during late US trading negating a rally in XAU/USD.
 
The big news yesterday was the downgrading by Moody’s Investor Service of China’s long-term sovereign debt rating to A1 from Aa3. The reason given for the downgrade was a ‘material rise’ in debt across the entire Chinese economy.

Good morning everyone and I trust you had a good weekend.
 
Choppy, volatile trade was seen across the precious metals complex to close out the week with gold and silver discounting the continuing rebound in US equities and instead taking their lead from a weaker US Dollar Index, to finish firmer on the week. Palladium, which had proved the stellar performer of the complex (in the face of weakness across gold, silver and platinum) spent the week backpedalling.
 
US domestic political flux, geopolitical tensions, economic data releases and the probability of a US Federal Reserve rate hike in June all remained in investor’s crosshairs.
 
Friday’s release of the CFTC Commitments of Traders Report (as at May 16th) showed:
 
·         Continuing significant long liquidation AND short selling by non-commercial speculative participants in gold
 
·         Continuing heavy short selling in silver, however the lower levels provided the opportunity for ‘bargain hunting’ for non-commercial speculators as they dipped their toes back in from the long side.
 
·         Modest short covering in platinum.
 
·         Modest long liquidation and short selling in palladium.

In a stunning announcement made by one of China’s largest insurers, Foresea Life has warned of "mass defaults and social unrest" unless China's regulator lifts a recent ban on its issuance of new products.

Good morning everyone and Happy Friday!
 
Confusion on the US political scene transmitted across to financial market volatility yesterday as early US dollar and equity market weakness drove precious metals values higher, before a reversal in the Dollar and stocks pushed the precious metals complex lower by the close of trading in New York.

Good morning everyone,
 
“Markets can remain irrational longer than you can remain solvent” (John Maynard Keynes).
 
It pains me having to draw inspiration from the British economist but given what’s been witnessed across the financial markets over the past 24 hours, Keynes’ observation is apposite.
 
Without venturing into overtly political territory, the unprecedented white-anting of the Trump Administration via leaks, conjecture, speculation and arguably some outright falsehoods disseminated by various ‘media’ outlets provided to them by ‘anonymous’ sources in an attempt to link President Trump (and anyone connected with him) with nefarious dealings with ‘The Russians’ (as a path to impeachment), turned into a frenzy yesterday and spooked the markets as investors fled US stocks and the Dollar and sought refuge in perceived safe havens like precious metals. Additional fuel was provided by the fact that precious metals markets were significantly less long than they were a month ago.
 
That pretty much captures the nature of Wednesday’s move in a nutshell.
 
Technically, XAU/USD posted a monster bullish engulfing candlestick on the Daily chart yesterday, bursting through minor trendline resistance and bringing the psychological ‘big figure’ at AUD 1700 as well as the mid-April resistance at the AUD 1710/1715 level back into play. Dips are likely to be bought. A huge bullish candlestick was also posted in XAU/USD and having eventually cleared resistance at USD 1245, the way now opens back towards USD 1280.
 
With gold rallying more appreciably than silver, the Gold/Silver ratio reversed the entirety of its slide lower over the previous couple of days.
 
The intraday (inverse) correlation between the USD/JPY & XAU/USD remained strong however it was clear that it was ‘headline risk’ that drove all markets yesterday and should continue to do so in the interim.
 
Good luck.
 
Regards,
Andre

Gold and silver were firmer as the week commenced and perhaps it was no great surprise, as a cursory glance at the latest CFTC Commitments of Traders Report (as at May 9th) showed significant length had come out of both metals with long liquidation continuing unabated over the course of the reporting week. Also supporting precious metals prices on Monday was a softer US Dollar Index.

Gold prices have stabilised overnight, after falling down toward USD $1215oz, providing some respite for precious metal longs who’ve endured a painful few weeks, with both gold and especially silver down noticeably.

There was no major news driver overnight, though more important data is set to be released tonight on both sides of the Atlantic. In Europe we’ll get a look at German GDP, whilst in the US, we’ll get data on retail sales and inflation, which will no doubt make an impact on expectations of a June rate hike by the Fed.

Despite the current gloom surround the price trajectory for precious metals, there are some optimists, with ABN Amro seeing the metal heading back to USD $1300oz in 2017, and USD $1400oz in 2018, with the bank expecting real yields in the US, and the USD itself.

It’s been another soft week for precious metal prices, with gold currently trading just below USD $1,220oz. Silver is currently sitting just above USD $16oz, a more than 13% fall from its mid April 2017 high, when it briefly pushed beyond the USD $18.50oz mark.
 
There have been no shortage of headwinds for the sector of late, including the continued rise of the USD, relative geopolitical calm, rising USD bond rates and stock markets, and the greater likelihood of a June rate hike from the Fed, all of which temper demand for safe haven assets.

Good morning everyone,
 
XAU/USD stuck to the recent script, holding doggedly to the (inverse) correlation between itself & USD/JPY (chart attached). Speculative rebalancing & technical selling resulting from US dollar and equities strength, as well as the
near certainty of a June US Federal Reserve interest rate hike, all continued to weigh upon the complex. Also depressing metals values was broad-based bearishness across the entire commodities asset class ranging from iron ore to crude oil.
 
XAU/AUD swung freely within a wide range yesterday, trading from AUD 1660 at the open to just short of 1675, before giving up the ghost at the European open and retreating to 1655 where it steadied and bounced to close at 1665.
AUD 1666.00 proving something of a pivot over the course of the past week. The volatility was driven by fluctuations in the AUD/USD which weakened on the back of Retail Sales (March) data released during early Far Eastern trade before re-focusing on the Federal Budget statement in the evening which resulted in choppy, sideways trade between 0.7330 to 0.7360 through to the close.
 
Nothing further to add at present. Technically, XAU/AUD held and bounced off the 200 Day moving average at AUD 1652 and moved back above the 38.2% Fibonacci retracement of the AUD 1578 to 1712.75 move (respectively those are; AUD 1661.25 (38.2%), 1645.30 (50.0%) & 1629.40 (61.8%)) and a short-squeeze back into the AUD 1675 / 1685 zone would not surprise at all.
 
In XAU/USD the 100 Day moving average near USD 1222.00/oz finally gave way which now leaves the path open for a probe of the psychological ‘big figure” at USD 1200.00/oz and the March 10th low at USD 1195.00/oz.
 
The Gold/Silver ratio ‘hung’ tantalisingly close to the 76.00 level for the fifth successive day but was unable to muster the momentum for an advance.
 
Enjoy the proxy USD/JPY trade in XAU/USD for the time being.
 
Kind regards,
Andre

Good morning everyone,
 
Choppy, range-driven trading was seen in gold on Monday with both XAU/AUD & XAU/USD rallying after the result of the French election became known but then completely reversing by the close of trading in New York on the back of US dollar and equity market strength, continuing speculative rebalancing across the precious metals complex and with the prospect of a June US Federal Reserve interest rate hike continuing to weigh.
 
If a picture is worth a thousand words, then the attached intraday graph showing an almost 100% (inverse) correlation between XAU/USD & USD/JPY says all that needs to be said about yesterday’s price action. XAU/USD moved in (inverse) lockstep almost tick for tick with USD/JPY - it looks as if gold speculators have chosen to lock in on USD/JPY as their beacon for now.
 
Elsewhere, last week the World Gold Council (WGC) released data showing;
 
·         1st Qtr global gold demand fell due to a sharp decline in investment demand.
·         Demand from the world’s two largest gold consumers, India & China increased by 8% to 282 tons (China) & 15% to 124 (India).
 
·         WGC expects gold demand in 2017 to total 900-1,000 tons (China) & 650 - 750 tons (India).
·         Gold supply fell 12% (year-on-year) with mining production steady.
·         Supply of gold scrap dropped markedly, down 21%.
 
GFMS released provisional data showing that Indian gold imports more than doubled in April to 75 tonnes compared with a year ago due to strong seasonal (festival) demand.
 
Technically, XAU/AUD continued to post a lower high / lower low as it gravitated towards the 50% Fibonacci retracement of the AUD 1578 to 1712.75 move (respectively those are; AUD 1661.25 (38.2%), 1645.30 (50.0%) & 1629.40 (61.8%)), as well as the 55 & 200 day moving averages.
 
XAU/USD tested the 100 Day moving average near USD 1222.00/oz for the second successive day and held for the time being - the last line of defence ahead of the March 10th low at USD 1195.00/oz. Yesterday’s Doji candlestick reflects market indecision around these levels as XAU/USD closed mid-range for the day, just beneath its opening level.
 
The Gold/Silver ratio stalled ahead of the 76.00 level for the fourth successive day.
 
Good luck.
 
Kind regards,
Andre

Gold prices in Australian dollars have had a small rise today, with the local currency under pressure after yet another disappointing retail sales report. The data, released by the ABS at 11.30 this morning, showed a decline in retail sales spending of 0.1% for the month, with annual growth coming in at just 2.1%, the weakest result since June 2013. If one factors in population growth, annual retail sales per capita are now declining, a testament to record low wage growth, record high private debt levels, and a savings rate that is negative once compulsory super is factored in.

This result is a prime example of the tepid economic environment Australia finds itself in, and will in turn put more pressure on the RBA to cut rates, something we are almost alone in continuing to forecast. That will boost Australian dollar gold prices, and likely gold demand from Australian investors, as lower rates will punish savers directly, whilst a lower AUD increases imported inflation. Gold is a natural alternative in such environments, with todays news reaffirming the role precious metals can play in a well diversified portfolio.

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.

Good morning everyone,
 
The Federal Open Market Committee left US interest rates unchanged in its current range between 0.75% and 1.00% but it was the hawkish tone of the MonPol statement suggesting that a June hike is a lay down misere, that drove precious metals values lower overnight.
 
Far Eastern and European trading had seen XAU/AUD rally strictly on the back of corresponding AUD weakness (XAU/USD flatlining).
 
Prior to the release of the FOMC statement, the private US ADP employment survey (Apr) came in +177K (vs +185K expected & vs negative revised +255k for March (initial +263K).
 
Onto the FOMC announcement:
 
*FED SAYS GROWTH SLOWDOWN IN 1Q LIKELY TO BE TRANSITORY
*FED SAYS 12-MONTH INFLATION RUNNING CLOSE TO ITS 2% GOAL
*FED: JOB GAINS SOLID, HOUSEHOLD SPENDING ROSE ONLY MODESTLY
*FED: LABOR MKT CONTINUED TO STRENGTHEN EVEN AS GROWTH SLOWED
*FED REPEATS IT MAINTAINING BALANCE-SHEET REINVESTMENT STRATEGY
*FED SAYS FOMC VOTE WAS UNANIMOUS
 
The part of the statement that investors zeroed in on was; “The Committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2 percent over the medium term”.
 
The markets viewed the announcement as ‘hawkish’ with interest rate futures pricing in a 94% probability of a June hike.
 
There was the usual algo-driven ‘head fake’ spike higher as soon as the statement was released but this was immediately reversed as XAU/AUD & XAU/USD gravitated towards some of the downside technical levels we have highlighted over recent days. XAU/AUD posted a low of 1665.00/oz prior to the close and XAU/USD posted a low of 1236.00/oz.
 
Focus now turns to Friday’s US Non-Farm Payrolls and Employment data (April) from the US with market consensus of a +190K additional jobs and an Unemployment Rate of 4.6%
 
Technically XAU/AUD posted a ‘long legged Doji’ candlestick yesterday (a wide intraday range but with a close back at the day’s open, reflecting market indecision) and hovers just above the first potential area of support of 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%). The 200 Day Moving Average at AUD 1655.00 will also be a closely watched - a potentially critical inflexion point.
 
Entrenched speculative longs are undoubtedly sucking wind now with XAU/USD plummeting below the 200 Day moving average at USD 1251/oz as well as through the bottom of the triangular congestion trendline support at USD 1242.00. The nearest downside supports now present at the 100 Day moving average (USD 1222.00/oz and the March 10th low at USD 1195.00/oz).
 
The Gold / Silver ratio continued its textbook uptrend (higher highs and higher lows) reaching a peak of 75.57 overnight as silver continued to take it in the neck relative to gold.
 
Since topping out on April 17th, silver has been in a textbook downtrend (lower highs and lower lows) and whilst the market to all intents and purposes may be oversold, trying to pick a bottom at present would be akin to trying to catch a falling knife. The next critical level of technical support appears at the 20/12/2016 low at USD 15.63/oz.
 
Silver and platinum hit multi-month lows (silver’s lowest since Jan 6th and platinum’s lowest since Jan 3rd at USD 896/oz) with the gold/platinum spread blowing out to USD $340 presently. Remarkably, palladium remains buoyant in the face of weak US car sales data.  With US auto sales growth driven by cheap credit any future rate hikes have the potential to slam the brakes on the industrial metal’s ascent.
 
Finally, on the French election front, the two candidates debated overnight with Mme Le Pen quipping that come Monday “in any case, France will be run by a woman: Me or Madame Merkel,”
 
Good luck and May the 4th Be With You!
 
Regards,
Andre

This week, I took advantage of a temporary pullback in precious metal prices to Top Up my ABC Bullion Gold Saver account. I normally use the ABC Bullion Gold Saver to invest a small amount in both gold and silver every week, a process that is fully automated. The process saves me time as I don’t need to make bank transfers or place individual orders each week, as it’s fully automated.

Good morning,
 
Unsurprisingly, investors have swum to the side of the pool ahead of Wednesday’s FOMC monetary policy statement by the US Federal Reserve at which it is anticipated that the central bank will keep interest rates unchanged.
 
A skinny AUD 1664 – 1672 XAU/AUD range was seen yesterday with movements driven entirely by AUD / USD fluctuations (XAU / USD flat lining).
 
Not much more to add presently. The geopolitical flame for the moment has been turned down from ‘heat’ to ‘simmer’ with US President Trump engaging with Russian Federation President Putin via telephone overnight to discuss North Korea, Syria and US - Russian relations.
 
Once the FOMC announcement is dispensed with the markets will turn their attention to Friday’s US employment data release and the onto the second round of the French Presidential election at the weekend. Whilst I hold no strong view one way or the other regarding the outcome, the punditry, (discredited) pollsters and bookies are all showing candidate Macron as an unbackable short-priced favourite in the two-horse race against the National Front’s Mme Le Pen. What could possibly wrong after witnessing Brexit & the election of Donald Trump under similar circumstances (i.e. rank outsiders given next to no chance of success)? The situation brings to mind the following trading pearl from ‘the man who broke the Bank of England’ that; “Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.”
 
From a technical perspective, XAU / AUD flirts with the first potential area of support at 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%). The 200 Day Moving Average at AUD 1656.00 will also be a closely watched - a potentially critical inflexion point. In XAU / USD terms, gold continued to push towards the bottom of the triangular congestion and held just above the technically important 200 Day Moving Average at USD 1251.00 with trendline support beneath that at USD 1242.00.
 
The Gold / Silver ratio continued higher reaching its highest level since June 28th last year.
 
Good luck.
 
Regards,
Andre

Good morning everyone.
 
The entire precious metals complex was driven lower on Monday, commencing during Far Eastern trading when news began to filter through that the US Congress had reached a bipartisan agreement to keep the government open through until the 1st of October by increasing the ‘debt ceiling’ (having only agreed last Friday to funding for a week). Included amongst all the horsetrading were increased funding for the military and border security, a rejection of funding for a wall on the U.S.- Mexico border (with $1.5 billion allocated towards investment in new technology and upgrades to existing infrastructure to make the border more secure).
 
The US dollar immediately surged on the back of this news and precious metals values (particularly in AUD) were consequently driven lower.
 
With much of Europe absent due to May Day / Labour Day holidays, the reduction in liquidity meant that there was little by way of support to arrest the decline.
 
From the US overnight, equities remained buoyant in the face of a slew of seemingly disappointing economic data releases, thereby keeping precious metals under pressure right though until the close. Data included;
 
·         A significant upward revision to Feb Construction Spending (potentially influencing Q1 GDP revisions). U.S. Construction Spending (Mar) -0.2% (vs +0.4% expected & vs Feb positive revised +1.8% (was +0.8%)).
·         U.S. Manufacturing ISM (Apr) 54.8 (vs 56.5 expected & vs 57.2 in Mar)
·         U.S. Personal Income (Mar) +0.2% (vs +0.3% expected & vs +0.3% Feb negative revised).
 
All economic data releases however will take a back seat to the two major economic events this week;
·         The meeting of the US Federal Reserve’s FOMC on Tuesday & Wednesday (with a monetary policy statement at its conclusion which is expected to leave rates on hold but the wording of which will receive significant scrutiny from investors)
 
·         The Bureau of Labor Statistics monthly release of Non-Farm Payrolls / Employment data on Friday.
 
Geopolitical / geostrategic concerns remain but have receded somewhat for the moment.
 
From a technical perspective, yesterday’s price action registered an ugly (from a bullish perspective) bearish engulfing candlestick with potential areas of support now emerging at the Fibonacci retracements of the AUD 1578 to 1712.75 move. Respectively these are; AUD 1661.25 (38.2%), 1645.30 (50.0%) & 1629.40 (61.8%). The 200 Day Moving Average at AUD 1656.20 will also be a closely watched, potentially critical demarcation point. In XAU / USD terms, gold dropped deeper within the triangular congestion and the main support areas to watch will be the 200 Day Moving Average at USD 1251.00 and trendline support at USD 1241.00.
 
The Gold / Silver ratio continued higher to 74.72 as silver was dealt with more harshly comparative to gold on the day.
 
Good luck.
 
Kind regards,
Andre

Good morning everyone and I trust you had a good weekend.
 
Sideways, range-trading was seen ahead of Friday’s US GDP data release but price action turned extremely volatile and choppy post GDP figures.
 
US GDP registered its weakest 1st Qtr result since 2014 at a +0.7% rise (vs +0.8% to +1.0% expected) due to a government cutback on defence spending according to the Commerce Department. 4th Qtr GDP came in at 2.1%
 
Gold finds itself caught in a tug-of-war between supportive sentiment derived from geopolitical / geotstrategic events and the negative sentiment driven by a generally strong US Dollar and a roaring equities market that presently shows no sign of abating (the Dow Jones Industrial Index flirting with record highs).

USD precious metal prices have weakened over the past several trading days, with the price of gold currently trading at USD $1,264oz, down close to 2% from their temporary run up toward USD $1,290oz. Silver has also weakened, with the price dropping close to 3% in the past week, currently trading at USD $17.40oz.
 
Australian dollar investors in precious metals have been cushioned by the fall in the local currency, which has fallen vs. the USD over the past few trading days. AUD gold is trading just above $1,690oz, whilst silver is trading at AUD $23.30oz.
 
The biggest developments in markets over the past week or so were in France and in the United States, where President Trump unveiled his proposed tax reforms that, if enacted, would among other things, reduce the current multi-tiered personal income tax system to just three tax brackets, and reduce the corporate tax rate from 35% to 15%.

Gold was largely confined to an AUD 1690 – 1700 range on Thursday, while in USD terms the metal chopped around between USD 1262 – 1270 (albeit with a modest ‘offered’ tone) as consolidation remained the order of the day. ECB

Good morning everyone.
 
A choppy day as far as XAU/USD (gold in USD) was concerned with the prices staging a late rally on US dollar and stock market weakness but in XAU/AUD (gold in AUD) after some early price weakness in the Far East, prices staged a textbook channel uptrend on the day (largely an almost 100% inverse correlation to the move in AUD/USD on the day) (charts attached).

Good morning everyone.
 
The investing ‘herd’ eschewed safe haven assets and piled back into ‘risk-on’ assets (stocks) and currencies which resulted in lower precious metals prices overnight. Geopolitical tensions (temporarily?) took a back seat to a number of other factors that drove the shift in sentiment.

Good morning everyone.
 
The investing ‘herd’ eschewed safe haven assets and piled back into ‘risk-on’ assets (stocks) and currencies which resulted in lower precious metals prices overnight. Geopolitical tensions (temporarily?) took a back seat to a number of other factors that drove the shift in sentiment.
 
Namely, these were (in no specific order of importance);
 
·         A resolution to the perennial US ‘debt ceiling’ charade which had the potential to see sections of the US government shutdown (and the US government default) by the weekend, if Congress refused to increase the ceiling.
This has been averted by President Trump’s willingness to kick into the long grass, his beloved ‘Great Wall of Mexico’ project until September.
 
·         The result of the first round of the French Presidential elections at the weekend with the clairvoyants pollsters placing the establishment pro-Europe ‘centrist’ Emmanuel Macron 20 points ahead of the National Front’s Marine Le Pen and some institutional analysts giving Mr Macron a 99.9% probability of securing the Presidency (what could possibly go wrong in a two horse race?).
 
·         US dollar strength on the back of President Trump pressing legislators to move swiftly on reducing the US corporate rate of tax to 15%. Reports in the WSJ indicate that Trump has given orders to get it done and not worry about effects on the deficit (what difference does it make saddling US taxpayers with a mere estimated 2 trillion additional US government debt that this so far unfunded policy will add to the already gargantuan USD 20 trillion tab?). Additionally, the President’s Secretary of Commerce, Wilbur Ross announced a 20% retroactive tariff on Canadian softwood lumber as a reprisal for the dumping of allegedly ‘subsidised’ Canadian lumber onto the US market causing the Greenback to soar against the Loonie.
 
Elsewhere;
 
·         The arrival of a US nuclear submarine in South Korea was met with a series of live-fire military exercises from North Korea but this had little impact on precious metals values for the aforementioned reasons.
·         Gold bullion imports into China reportedly reached their highest level since May 2016 at approximately 112 tonnes as gold priced in CNY remained flat after two consecutive months of 3% average gains.
 
·         In the ETF space, the SPDR Gold Trust (the world’s largest ETF) saw inflows of 1.5 tons on Monday taking total holdings back to the 2017 high of 860 tonnes registered last week.
 
·         While market consensus is that further US Federal Reserve interest rate increases are probable this year, with the rest of the worlds central banks reportedly printing 200 billion a day in aggregate, many believe that inflationary expectations and negative real interest rates in those countries engaging in that form of financial alchemy will continue to underpin gold demand over the medium to longer term.
 
·         The Platinum Group Metals (PGM’s) have seen platinum in USD terms trading at an over $300 discount to gold for the past 2½ weeks whilst palladium at $800/oz narrows the gap to platinum.
 
Technically, gold in AUD terms continues to see mean reversion back at the AUD 1670 level and as mentioned last week GOLD/AUD could easily find itself consolidating back within the AUD 1660 – 1675 region. While in USD terms, gold has dropped back into the triangular congestion region and some consolidation within the USD 1245 – 1265 zone would provide a better base from which gold bulls might regroup and attempt a fresh assault on the psychologically important USD 1300.00 level eventually.
 
Good luck.
 
Kind regards,
Andre

Good morning everyone and I trust you had a pleasant weekend.
 
As expected, gold went into a holding pattern as the week drew to a close on Friday, there was little to propel the metal outside of its AUD 1690 - 1710/15 (USD 1275 – 1295) trading band.
 
Of course, most investors decided that the prudent course of action was to take a “wait and see” approach ahead of the outcome of the first round of the French Presidential elections yesterday.
 
This morning, Gold/AUD has gapped AUD 20.00 lower on the open and Gold/USD approximately USD 10.00 lower as centrist Independent candidate Emmanuel Macron pipped National Front’s Marine Le Pen (23.8% vs 21.6% with approximately 92% reported), both of whom will now square off in the second round of voting on May 7th. The result was the first time in 60 years that an establishment candidate from either the Republican or Socialist parties has failed to make it through to the second round.
 
With Madame Le Pen’s nationalist, protectionist and decidedly hostile European Union policy platform (she has promised to offer French voters the opportunity of ‘Frexit’ and a withdrawal from NATO should she prevail) running a close second to Mr Macron’s more moderate European Union policy (he believes the project needs reformation but does not want to take France out entirely), investors have (for the moment) assessed that the existential threat to the EU has suffered a setback, hence a sharp rally in the Euro (and general USD weakness) on the open this morning transmitting through to precious metals weakness. Furthermore, it is expected that the majority of supporters of the failed first round candidates are likely to swing in behind Mr Macron on May 7th making it extremely difficult for the Nation Front leader to secure the Presidency.
 
Technically, we noted in Friday’s commentary that a break on the downside through the AUD 1690 level would likely open the way to some mean reversion back towards AUD 1670 and that is precisely what we have seen this morning whilst Gold/USD also traded down to the top of the USD 1245 – 1265 zone (this morning’s low USD 1265.75 to this point in time), that we mentioned might be a better base from which gold can attempt to scale the USD 1300.00 eventually.
 
It should be noted that silver was pressured heavily to the downside in Friday’s trading with market sources suggesting that this was due to First Notice Day for the May futures contract on COMEX this week. The May EFP has been hit and the May/July spread has moved out with the outright May futures driven lower. Buyers are expected to emerge today when the May-July rolls / liquidations are complete.
 
Have a great week.
 
Kind regards,
Andre