Senior Trader Daily Update 10 July 2017

Good morning everyone and I trust you enjoyed your weekend.
 
We are running a little lean here this week, so apologies for the morning wrap coming through as a midday wrap today (and possibly for the remainder of the week) but better late than never!
 
In a nutshell, precious metals were placed on the backfoot on Friday after another round of strong employment data from the US. The headline Non-Farm Payrolls figure showed that 222,000 jobs were added and that the unemployment rate increased from 4.3% to 4.4% (vs (+177K & 4.3% expected respectively). The May payrolls number was revised upwards from 138K to 152K and April was also revised upwards from 174K to 207K. A total +47K jobs more than previously reported.
 
At the G20 meeting in Hamburg, both the Russian and US Presidents claimed that the outcome of an over 2 hour unscheduled face-to-face meeting was constructive along a number of lines, including the (unproven) claims of Russian “election hacking” and the Syrian situation. Rhetoric surrounding the situation on the Korean Peninsula remained elevated and US President Trump also indicated that a trade deal was in the offing with the UK.
 
While the CME has kept schtum on the cause of Friday’s silver “flash-crash”, it is worth noting that the exchange voided all trades below USD 15.54 down to USD 14.34 (for the September futures contract).
 
The latest CFTC Commitments of Traders Report (as at July 3rd with July 4th being a holiday) showed;

• A continuation of the combination of significant long liquidation as well as short selling, contributed to a reduction in net non-commercial speculative long length of almost 4.2 million ozs in gold (Futures & Options combined). Futures and Options combined positioning now stands at +90,681 contracts (9.068 million ozs) vs +214,101 contracts (21.41 million ozs) just four weeks ago.

• A continuation of significant short selling from the non-commercial speculative silver community and long liquidation, in line with general bearishness across the precious metals complex. A net change in total long length of just shy of 48 million ozs follows on from last week’s 55 million ozs reduction and the prior week’s 73 million oz exodus. Futures and Options combined positioning now stands at +25,564 contracts (127.82 million ozs) vs +65,310 contracts (326.55 million ozs) just four weeks ago.

• Follow-through bearishness in the Platinum Group metals on balance, with non-commercial platinum speculative accounts continuing to add to short length and longs exiting. Both long and short palladium speculative accounts pared back commitments. Compared to four weeks ago, platinum net exposure (Futures & Options combined) has declined from +19,781 contracts (approx. 990K ozs) to just 7,997 contracts (approx.. 400K ozs). Palladium on the other hand has held comparatively steady at +20,126 contracts (approx. 2 million ozs) vs +21,136 contracts (approx. 2.11 million ozs) four weeks ago.

Technically, XAU/AUD has returned to retest the AUD 1591.50 (March 21st low support line), a break of which would open the way back to the AUD 1578.00 (March 15th low).
 
XAU/USD has seen the USD 1214 (May 9th low) ceded and the market moves lower within the downtrend channel, opening the way to the conjunction of the lower channel support line and the USD 1195.00 (March 10th low) to 1197.50 (mid-March lows) area now.
 
Good luck and have a good week.
 
Regards,
Andre