Morning Gold Market Report Clearly gold benefited from positive US economic data last Friday, as that in turn might have fostered some hope for improved physical demand for gold and other physical commodities over the coming months. While weakness in the Dollar added to the upward tilt in gold on Friday, we suspect that classic technical short-covering provided some of the lift in prices as well. Ongoing supply-side concerns in the Platinum Group metals also added into the bull equation on Friday, as the strike situation in South Africa could begin to reach outside of the Platinum Group metals during the weeks ahead. Some players might suggest that part of the rise in gold last week was a rotation out of US stocks, as investors viewed the lack of stimulus from the ECB, the hawkish stance from the US Fed and the tacit stimulus promises from the Chinese central bank as a generally discouraging environment for equities. During the week ahead, the market will see a potentially critical Chinese import/export report, which in turn could give a clearer reading on the actual condition of the Chinese economy. Given the recent reaction in gold prices, the gold market appears to be shifting back toward a physical commodity market focus again with a need to see positive growth. The worlds largest gold ETF saw their gold holdings decline by 1.8 tonnes on Friday, and those holdings have now reached their lowest levels since March 7th. The Commitments of Traders Futures and Options report as of April 1st for Gold showed Non-Commercial traders were net long 127,121 contracts, a decrease of 18,410 contracts. The Commercial traders were net short 141,713 contracts, a decrease of 14,858 contracts. The Non-reportable traders were net long 14,592 contracts, an increase of 3,553 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 141,713 contracts. This represents a decrease of 14,857 contracts in the net long position held by these traders. Comex Gold Stocks were 7.824 million ounces up 16,075. Stocks have increased 13 of the last 20 days. Comex Gold stocks are at their highest levels in the past 10. It would appear that weaker equities have spawned a risk off mentality, as weakness in US equities at the end of last week, some extremely weak Japanese Leading Indicator results overnight and fresh aggression in the Crimea have cast a negative cloud over commodities to start the new trading week. It is also possible that looming FOMC meeting minutes ahead have fostered some long liquidation, as the Fed has surprised the trade in the recent past by their steadfast intention to a continue a pattern of tapering. Initial support is seen in the June gold contract down at $1,294.20 and then not until the $1,281.90 level. In order to put the bull camp back in control might require a further slide in the Dollar and another close back above $1,300 in June gold.
Posted on: Mon, 07 Apr 2014 12:59:06 +0000