Senior Trader Daily Update 18 July 2017

Good morning everyone.
 
Friday’s weak US CPI (+1.6% Y-oY) & Retail Sales data releases saw XAU/USD finally reclaim the technically significant 200 Day moving average, as price weakness from the first week of June to the first week of July culminated.
 
US dollar weakness and a retreat in US Treasury yields was consequently seen, helping to bolster XAU/USD as various Fed officials began to walk back rate hike rhetoric in relation to the September and December meetings of the FOMC. For the moment, gold ETF’s have not benefited with outflows continuing.
 
The release last Friday of the latest CFTC Commitments of Traders Report (as at July 11th) showed;

• A continuation of long liquidation as well as aggressive short selling, which led to a further reduction in net non-commercial speculative long length of 3.5 million ozs in gold (Futures & Options combined). Futures and Options combined positioning now stands at +6.03 million ozs vs +21.41 million ozs five weeks ago.

• The non-commercial speculative silver community continued to hammer the white metal from the short side but long liquidation abated somewhat. A net reduction in total long length of 63 million ozs to the week ended July 11th follows on from reductions of 48 million ozs, 55 million ozs, and 73 million oz in prior weeks. Futures and Options combined positioning now stands at +65 million ozs vs +326.55 million ozs five weeks ago.

• The Platinum Group Metals saw bargain hunting from non-commercial platinum speculative accounts in the face of further short selling, while palladium speculative accounts continued paring back commitments on both the long and short side.

Technically, XAU/AUD continues trending down within a well-defined channel. Supports are seen at the Jan 27th low at AUD 1566, the 19th December low at AUD 1554 and the 15th December low at AUD 1526. While the upper and lower channel boundaries are located at AUD 1589 & 1538 today.
 
XAU/USD presses the upper boundary of an embryonic uptrend channel bounded between USD 1217 & 1238.50 and as of this moment, further US dollar and equity weakness continues to support XAU/USD as newswires carry reports that the US Health Care Bill presently being negotiated has lost further support. As noted that the start of this commentary, the 200 Day moving average has been cleared at USD 1229.50
 
Finally, whilst precious metal have been on the backfoot for much of the northern hemisphere summer, the cryptocurrency market, Bitcoin in particular, took a 40% hit between mid-June and Monday of this week. It’s hard to see the argument for cryptocurrencies as a “store of value” with such tremendous volatility being witnessed. Overall market cap for digital currencies has fallen from $115 billion to $61 billion in a month according to the publication Coindesk.

Good luck.
Andre