Senior Trader Daily Update 12 December 2017

Hello everyone,
 
The bad news for precious metals (and specifically gold investors) is that some major support levels have ceded over the past few sessions with “risk on” being the trade du jour, spurred on by robust economic progress from the world’s largest economy, the USA. If a picture says a thousand words, then the attached charts for the US Dollar Index (DXY), the Dow Jones Index and the phenomenon that is Bitcoin, speak volumes. So too does the latest Commitments of Traders data as at December 5th (see table below) which portrays significant levels of long liquidation across the complex but especially in gold and silver.
 
The good news is that we may have seen this all before. As the attached XAU/USD shows, every year going back to 2013 has seen gold price weakness into December and then a strong rebound commencing in January (all circled), perhaps suggesting profit taking / booksquaring into year-end. It is Christmas after all, and all those “G.I. Joe’s with the Kung-Fu grip” need to be paid for somehow! https://www.youtube.com/watch?v=uI4fVgVVpiw
 
Friday had seen the US Department of Labour Statistics report a +228K result for the headline Non-Farm Payrolls figure for November (well exceeding the +190K consensus) with the markets concluding that as a result, an interest rate hike at Wednesday’s conclusion of this week’s US Federal Reserve FOMC monetary policy meeting, is a lay down misere.
 
It’s a big week for the world of central banking with meetings scheduled for the ECB, Bank of England, Swiss National Bank and Norges Bank.
It was noted in last Thursday’s commentary regarding XAU/AUD that “Given the break beneath the major trendline support in recent sessions, it’s too early to rule out further downside weakness towards the 200 Day moving average at 1648.00” and the 200 Day moving average (and 100 Day moving average for that matter) is precisely where XAU/AUD finds itself lodged at present. Worryingly, a break of this level leaves very little by way of technical support until a sequence of lows/support around the AUD 1615.00 level extending back to late August. 
 
Similarly, a break beneath the August 8th low at USD 1251.50 yesterday has now left the trapdoor potentially open as far as USD 1205.00 - the 10th July low.
 
The XAU/XAG Ratio (the number ounces of silver that 1 ounce of gold can purchase), consolidates near recent highs with silver remaining the most friendless within the precious metals complex.
 

Good luck.
Regards,
Andre