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Commerzbank: Futures Speculators May Now Be Net Short In Gold

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Futures speculators may well have flipped to a net-short, or bearish, position in gold, says Commerzbank. The Commodity Futures Trading Commission releases a report each Friday showing the positioning of various categories of market participants as of the prior Tuesday. The last “disaggregated” CFTC report showed that money managers were net-long, or bullish, by only 10,528 contracts as of June 19. This was the lowest level in more than two years. Gold has fallen more than 3% since the start of June. “Even gold ETF [exchange-traded-fund] inflows of over three tonnes 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 recent days, gold is presumably still being sold via the futures market. Speculative net-long positions are likely in the meantime to have been switched to net-short positions.” The bank’s analysts say they are puzzled that gold has fallen so much, noting that despite a Federal Reserve rate hike earlier this month, real interest rates are still virtually zero and real interest rates in the euro zone, based on the yields of German government bonds, are negative – all of which should help gold. “Normally, correcting stock markets likewise boost demand for gold as a safe haven, yet this has also failed to happen of late,” analysts add.

By Allen Sykora of 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 a technical-chart “death cross” could portend further weakness in gold prices, yet the threat of a trade war could yet rescue gold. The metal has fallen sharply this month despite growing trade-war rhetoric, with analyst frequently citing the stronger tone in the U.S. dollar and the U.S.-European interest-rate differential. Spot gold was down $1.90 to $1,256.70 an ounce as of 8:11 a.m. EDT. “Next support 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-metals dealer with MKS. “What is of slight concern is that last time we saw a 'death cross' 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 average breaks above a short-term average. “The (possible) shining light in the near term is that the trade war will completely erupt, which should be bullish for gold,” Thorndike says. “It so far has failed to ignite any safe-haven demand, however if tariffs and protectionism continues to mount, one would think it would have to bolster gold's appeal.”

By Allen Sykora of Kitco News; asykora@kitco.com

 

FXTM: Higher U.S. Dollar, Rate Expectations ‘Nemesis’ For Gold

Wednesday June 27, 2018 08:39

Gold has hit a new low for the year 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-haven appeal,” Otunuga says. “Price action suggests that a stronger dollar and expectation of higher U.S. interest rates remain gold’s biggest nemesis. With the dollar likely to remain supported as expectations heighten over the Fed raising interest rates at least two more times this year, gold could be poised for further punishment despite the risk aversion.” The analyst says the daily and weekly technical charts are bearish for gold. “A solid breakdown below $1,250 could open the doors towards $1,241.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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