Commerzbank: Futures Speculators May Now Be Net Short In Gold
Futuresspeculators may well have flipped to a net-short, or bearish, position in gold,says Commerzbank. The Commodity Futures Trading Commission releases a reporteach Friday showing the positioning of various categories of marketparticipants as of the prior Tuesday. The last “disaggregated” CFTC reportshowed that money managers were net-long, or bullish, by only 10,528 contracts as of June 19. This was thelowest level in more than two years. Gold has fallen more than 3% since thestart of June. “Even gold ETF [exchange-traded-fund] inflows of over threetonnes yesterday - the first in 12 days - were unable to halt the price slide,”Commerzbank says. “As there has been no other news about gold demand in recentdays, gold is presumably still being sold via the futures market. Speculativenet-long positions are likely in the meantime to have been switched tonet-short positions.” The bank’s analysts say they are puzzled that gold hasfallen so much, noting that despite a Federal Reserve rate hike earlier thismonth, real interest rates are still virtually zero and real interest rates inthe euro zone, based on the yields of German government bonds, are negative -all of which should help gold. “Normally, correcting stock markets likewiseboost demand for gold as a safe haven, yet this has also failed to happen oflate,” analysts add.
By Allen Sykoraof Kitco News; asykora@kitco.com
MKS: ‘Death Cross’ Worrisome For Gold;Trade War May Yet Offer Support
Wednesday June 27, 2018 08:39
MKS (Switzerland) S.A. cautions that atechnical-chart “death cross” could portend further weakness in gold prices,yet the threat of a trade war could yet rescue gold. The metal has fallensharply this month despite growing trade-war rhetoric, with analyst frequentlyciting the stronger tone in the U.S. dollar and the U.S.-European interest-ratedifferential. Spot gold was down $1.90 to $1,256.70 an ounce as of 8:11 a.m.EDT. “Nextsupport sits around [the] $1,245-50 area and we see resistance at around$1,270-75 in the short term,” says Alex Thorndike, senior precious-metalsdealer with MKS. “What is of slight concern is that last time we saw a 'deathcross' on a daily chart for gold (November 2016), the metal subsequently dropped~12%.” A death cross is a chart formation in which a long-term moving averagebreaks above a short-term average. “The (possible) shining light in the nearterm is that the trade war will completely erupt, which should be bullish forgold,” Thorndike says. “It so far has failed to ignite any safe-haven demand,however if tariffs and protectionism continues to mount, one would think itwould have to bolster gold's appeal.”
By Allen Sykoraof Kitco News; asykora@kitco.com
FXTM: Higher U.S. Dollar, RateExpectations ‘Nemesis’ For Gold
Wednesday June 27, 2018 08:39
Gold has hit a new low for theyear despite trade-war jitters, says Lukman Otunuga,research analyst at FXTM. Spot metal has fallen as far as $1,253.35 an ounce,and the U.S. dollar index is higher in early New York trading hours. “The fact that gold has tumbled to a fresh 2018 low this morning,despite global trade tensions weighing on [broad financial-market] sentiment,continues to beg the question if the precious metal has lost its safe-havenappeal,” Otunuga says. “Price action suggests that a stronger dollar and expectationof higher U.S. interest rates remain gold’s biggest nemesis. With the dollarlikely to remain supported as expectations heighten over the Fed raisinginterest rates at least two more times this year, gold could be poised forfurther punishment despite the risk aversion.” The analyst says the daily andweekly technical charts are bearish for gold. “A solid breakdown below $1,250could open the doors towards $1,241.”
By Allen SykoraFor Kitco News
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