“Everything has its limit - iron ore cannot be educated into gold.”
Overall Sentiment
- Global equity market and risk sentiment runs high – haven assets are not appealing
- Dollar bulls are nervous post September meeting minutes as officials are concerned about low inflation pressure
Speculative funds positioning
- Both longs and shorts increased their exposure – but recent price weakness is likely to put stale-long disappointed
Bullish perspective
- Its price action remains within the uptrend channel (see weekly chart)
Bearish perspective
- The dollar inverse head and shoulder formation is getting some traction here – gold could stay under pressure
Conclusion
Failure at 1306 and now just above 1275 tells a bearish story in gold so far
XAU/USD
“If I have cash and I can't figure a way to put it into real estate or my business, I hold it in gold and silver.” -
Overall Sentiment
- Dollar strength could push the white metal lower
- We wonder if recent weakness could encourage gross longs to cut their bullish exposure further
Speculative funds positioning
- Delayed COT data suggests that there were fresh buying and short-covering but recent price weakness is an indication that sentiment may have changed
Bullish perspective
It is difficult to put a bullish events on haven-demand after it reversed lower – perhaps further consolidation before it can attempt higher again
Bearish perspective
- Well the rally was temporary and brief – silver continue to trade within the downtrend channel (see chart below).
Conclusion
Sellers are keen to take back control-further selling has materialised and with the dollar poised higher – we cannot rule out further weakness but expect dips to remain well supported
XAG/USD
Market moving events this week
- ECB meeting – market participants keen to learn about the pace and scale of tapering
- US New home sales data and GDP numbers this Wednesday and Friday respectively
- Catalan leaders continue to defy PM Rajoy – orders from Madrid neglected
- The next Fed chair will be announced shortly by President Trump
S&P 500
US Dollar Index
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