Gold Prices Fall with Oil Despite Iran Threat, Silver 'Near Inflection' as Comex Bears Turn Bull

GOLD and SILVER PRICES fell in London trade Monday, dropping to 6- and 4-week lows respectively against a rising US Dollar as world stock markets edged higher but commodities dropped.
Brent crude oil fell to $73.50 per barrel – some $2 below last week’s 3.5-year highs – after new data showed a jump in US oil drilling but world No.5 oil producer Iran threatened to enrich uranium to a “higher” level than before the 2015 deal suspending its nuclear research if the White House of Donald Trump now quits the agreement.
New data from Germany showed inflation in the world’s 4th largest economy slowing hard in April.
Major government bond prices held firm, nudging longer-term US interest rates down from last week’s 4-year highs at 3.0%.
Gold fell 0.9% to $1312.50 per ounce for US investors while silver prices fell another 1.5% after losing 3.5% last week to trade at $16.26.
Both metals moved less in Euro or British Pound terms however, with gold edged only 0.3% lower against the “commodity currency” Australian Dollar.
“The markets have been quiet today with both China and Japan out for holidays,” said the daily Asian trading note from Swiss refining and finance group MKS Pamp.
“Gold has once again dipped below the 100-[day moving average] and [now broken through] the support level at $1315.
“Below that the psychological $1300 level awaits.”
New data after Friday’s close showed a continued divergence in speculative betting on gold and silver, with derivatives on the cheaper metal last week ending their longest stretch of net negative positioning among hedge funds and other money managers since current records began in 2006.
With silver prices spiking and then losing 3-month highs in US Dollar terms, Comex bears cancelled almost one in every four of their short silver contracts in the week-ending last Tuesday, the fastest cut to the gross short position since New Year.
That group’s bullish betting on silver meantime grew by 15%, pulling the net position into positive territory for the first time in 11 weeks.
Comex gold in contrast saw bullish betting fall last week as bearish bets grew, taking the net long position of Money Managers on gold futures and options down to its lowest of 2018 to date.
Chart of $bn notional value of net bullish gold vs. silver betting on Comex futures and options by the Managed Money category. Source: BullionVault via CFTC
Among the largest bullion-backed trust funds the picture was reversed, with interest in the iShares Silver Trust (NYSEArca:SLV) unchanged at two-month lows last week while the SPDR Gold Trust (NYSEArca:GLD) expanded to its largest size since Donald Trump’s surprise victory in the US election of November 2016.
“With 7 new short traders entering the market,” says weekly analysis of Comex positioning from French investment bank Societe Generale, “the number of traders has now turned net short.”
Silver thus moved over the last 2 weeks from one “mismatch” says SocGen – with net positive betting by the number of traders but net negative by the number of contracts – to another “mismatch”, with a larger number of bearish traders but a net positive number of bullish minus bearish bets overall.
“This move has never happened before…[and marks a] possible inflection point.”


This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.

Contact Us

Adelaide Store

Mezzanine Level
20 King William Street
Adelaide SA 5000
08 8223 2444
9:30am to 4:00pm (Mon. - Fri.)

Brisbane Store

Level 2
17-19 Mt. Gravatt-Capalaba Road
Upper Mt. Gravatt QLD 4122
07 3349 7965
10:00am to 4:00pm (Mon. - Fri.)