"Because gold is honest money, it is disliked by dishonest men" - Ron Paul
Overall Sentiment
- US Debt Ceiling, fresh Comey – Mueller - Trump evidence, destabilised Korean peninsula and negative interest rate support haven assets.
Speculative funds positioning
- After six consecutive weeks of short-covering, there was a mild build up as gold edge above $1,335 per oz
- Gross long continue to stretch higher and has room to target 2016 record high
Bullish perspective
- Fresh buying from speculative funds are driving the market higher
Bearish perspective
- As gross long positions start to look overstretched the September FOMC meeting could undo and forced some profit taking activity
Conclusion – Broke out of the multi-month downtrend line calls may ignite a new bull market in gold?
XAU/USD
“Many people miss the silver lining because they’re expecting gold.” – Maurice Setter
Overall Sentiment
- Judging by the strong haven-demand, global market investors remain sceptical and prefer the safety in gold and silver
Speculative funds positioning
- Previously overstretched gross short positions remain under pressure to cover. Perhaps capitulation of shorts and there were renewed fresh buying interest in silver which should bode well for the price
Bullish perspective
- Trade within an uptrend channel since the flash crash and shorts capitulation
Bearish perspective
- Previous bearish assumption was squashed given the strong price action but there is a downside risk that short-covering rally may have run its course
Conclusion – The fresh buying from speculative funds is a positive sign as trend-following traders have just started to rebuild their bullish exposure.
XAG/USD
Market moving events this week
- Market likely to digest the poor US NFP data – this will give US Fed the confidence not to hike in September.
- Perhaps the dollar index could enjoy a mini-dead cat bounce given how oversold it has been.
- Any talks of retaliation from the US towards North Korea could escalate matters.
- September 24th German election – Merkel has the upper hand for now
Monthly chart: XAU/USD XAG/USD
US Dollar Index
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