Senior Trader Daily Update 14 August 2017

Good morning everyone and I trust you had a good weekend.
 
Geopolitical ‘chaos’ underpinned the advance across the precious metals complex last week forcing investors to flick the switch from ‘risk on’ to ‘risk off’ and to decamp to safe haven assets. The white-hot rhetoric between the US Administration and Pyongyang has received saturation coverage in the media so there is no need for reiteration in this commentary.
 
Perhaps not surprisingly, some of the gains were pared on end-of-week booksquaring and profit-taking.

The latest CFTC Commitments of Traders Report (as at August 8th) showed:

• Heavy short-covering from non-commercial speculative gold accounts continued for a third successive week.

• Another week of non-commercial speculative short covering drove silver higher but some profit taking into the strength allowed bullish concerns to lighten up some long side commitments.

• Like silver, platinum was driven higher predominantly on short covering but there was a healthy level of buying seen from bullish concerns, while palladium speculative buying exceeded short selling.

Technically, as highlighted at this time last week, support on dips back towards the mid AUD 1570’s was favoured and the Fibonacci retracement targets at AUD 1619.50 (38.2%) & AUD 1640.25 (50.0%) (of the AUD 1728 to 1552.50 down move between June 6th and July 20th) remained in play. XAU/AUD duly took out those upside targets on the back of the threats of thermonuclear war between the United States and North Korea. Three days of bullish candlestick price action (circled) was followed by a ‘Long-legged Doji’ candlestick on Friday, with XAU/AUD extending to both the upside and downside before closing marginally below the day’s open, reflecting market indecision at present levels. On balance, dip buying is favoured on any mean-reversion with the AUD 1650 to 1660 region (100 Day moving average and 61.8% Fibonacci retracement of the AUD 1728 to 1552.50 down move) in play.
 
While the major trendline resistance just beneath the psychologically and technically important USD 1300.00 level is to be afforded due respect, four consecutive day’s of promising bullish price action (circled) has XAU/USD well-positioned to launch a serious assault on a ceiling that has held gold in check since November last year.
 
Good luck and have a good week ahead.
 
Regard,
Andre