Weekly Technical and Precious Metals Positioning Report - Gold - 9th July 2018

Gold rebounds from the December low, having achieved the measured target after breaking down from the January-April double-top formation.
 
Short term expect gold to oscillate between US$1244 and US$1266. If gold consolidates above US$1237, look for a recovery to extend to US$1287 and possibly US$1301. The current outlook favours the USD, with resistance at 96 initially.
 
Resistance lies at US$1266-69, in part from the Weekly Cloud base, US$1282 from the Weekly Turning Line, and US$1302 from the Weekly Standard line on the Ichimoku chart. Support lies at the recent low and c. US$1215.
 
US Employment data exceeded expectations at 213,000 jobs, 18,000 more than the forecast median growth. Gold and bonds shrugged off the optimistic numbers with gold dipping about US$5 before coming back. Look for 10-year USGG to move towards a yield of 2.76 pct.
 
Developing trade tensions still favour the Dollar with tariffs likely to impact EM markets more heavily, maintaining some safe-haven demand, import duties leading to a stronger USD and the carry favouring the USD for the time being.
 
Positioning to the 26th June was relatively unchanged on the long side during the course of June, however managed money shorts increased their bets as they gained in confidence, taking shorts to 9.487 million Tozs (compare that with the maximum gross short of 12.092 million seen in July 2015) Shorts stacked on 3.496 million of that position at a VWAP of US$1294, and another 1.11 million at about US$1271. Total open interest ticked up slightly this week, suggesting that more longs entered the market as the price rallied.
 
Silver is hanging on the weekly trend line for grim death, with the weekly candle for last week making a notable 'hammer' shape, which may signal a reversal of the recent downtrend. Resistance lies at US$16.55 from the Weekly turning Line, and US$16.72 from the Weekly Standard Line and Weekly Cloud base. Recent price action suggests a recovery to that level so long as the price stays above the recent low.
 
Managed money positioning shows that that shorts added almost 24 million Tozs to their positions at a VWAP of US$16.34 in the week ending the 26th of June, to a total of 261.06 million. Since the recent low made on the 2nd of July, open interest has declined by 12.21 million Tozs, suggesting that some speculators are willing to buy back at current levels.

Nicholas Frappell
Global General Manager

Disclaimer
The information contained herein is based on data obtained from sources believed by ABC Bullion to be reliable. However, such information has not been verified by, ABC Bullion, and ABC Bullion does not make any representations or take any responsibility as to its accuracy. Any statements of a non-factual nature constitute only current opinions, which are subject to change without notice. ABC Bullion (and/or its affiliates) may have positions in commodities referred to herein, and may hereafter liquidate such positions. Neither the information in this report, nor any opinion expressed, shall be construed to be, or constitute, a recommendation or an offer to buy or sell, or a solicitation of an offer to buy or sell, any commodities or other financial products mentioned herein.