Precious Metals News Update 22 January 2018

Hello everyone.
 
Precious metals closed out last week on a firm footing, most likely resulting from end-of-week booksquaring / profit-taking / shortcovering.
 
Over the weekend, headlines were dominated by news that the Democrats failure to extract concessions from President Trump’s Administration in relation to the granting of amnesty to illegal immigrants, had torpedoed the 60 Senate votes required to continue funding the “spending gap” of the US government, thereby leading to the closure of components of the US Government as of midnight Saturday.
 
Irrespective of media hype, this is not the first time this situation has come about (as can been seen from the graphic below) and the reality of what now follows is that various US Federal government functions are frozen and some government employees are given a temporary “leave of absence”. Areas / departments affected include; national parks, monuments, museums, the processing of applications for passports and visas; the maintenance of U.S. government websites, the IRS, the Treasury Department, the Federal Housing Administration, the White House, the Securities and Exchange Commission, the CFTC, the judicial system, employment and labour departments, health departments and national security departments.

Precious metals largely shrugged off the news at the opening of Far Eastern trade today and were hovering at or near their closing levels on Friday. The EUR/USD gapped higher however, on newswire reports that progress had been made towards the formation of a coalition that would ensconce Chancellor Angela Merkel in her fourth term at the helm of the German government.
 
This week’s monetary policy announcements by the Bank of Japan and the European Central Bank are likely to hold greater interest for investors than the shenanigans in Washington D.C.
 
Friday’s CFTC Commitments of Traders report (as at January 16th) showed:

• Increased exposure from both long and short non-commercial speculative gold accounts at a rate of approximately 3:1 (Futures) and 5:1 (Futures & Options Combined) in favour of the long side, resulting in net increase in long length of between 840,000 ozs (Futures only) to 1.225 million ozs (Futures and Options Combined).

• Liquidation from both long and short non-commercial speculative silver accounts, resulting in a net decline of long length of 4.2 million ozs (Futures) and 7.3 million ozs (Futures and Options Combined).

• Shortcovering from platinum non-commercial speculative accounts resulting from aggressive buying by the long side of the market, leading to a net increase in long length of over 300,000 ozs.

• Like silver, palladium non-commercial speculative accounts pared exposures on both the long and short side of the market, leading to a decline of just over two tons in long length.

Technically, XAU/USD is chopping around between “double-top” resistance at the USD 1345 level seen on Jan 15th and 17th, and holds above USD 1319.25 (the 23.6% Fibonacci retracement of the USD 1236.50 to 1345.00 move). Momentum driven buying (or selling) is likely to eventuate depending in which level breaks first. A break beneath 1319.25 brings corrective targets into play at USD 1315.50 (21 Day moving average) and Fibonacci retracements at USD 1303.50 (38.2%), USD 1291.00 (conjunction of the 50% retracement and 100 Day moving average) and USD 1275 / 1277 (200 Day moving average / 61.8% retracement). While a topside breakout would bring last year’s September 8th high at USD 1358 and July 2016 highs at USD 1375.00 into contention.
 
XAU/AUD has bounced off support near the 200 Day moving average at AUD 1653.00 with immediate resistance remaining in place at the mid-Jan 2018 high at AUD 1695.00 (just beneath the psychological big-figure resistance at AUD 1700.00).
 
XPT/USD’s impressive bounce since mid-December last year places it within striking distance of resistance at USD 1,050 - the upper end of a sideways trading band that has been in place since mid-December 2016. Like XAU/USD, a topside breakout would likely draw momentum driven buying which would bring the early August 2016 high just beneath USD 1200.00 into play. For the present however, that is placing the cart before the horse.
 
Good luck.
 
Regards,
Andre