Silver and oil rise, gold drops despite increased physical demand

Gold Technical analysis, overview, strategies, and levels

Despite the increased demand for physical gold and liquidity on futures contracts (especially those closest to expiry) light making its price more volatile given buyers aren’t just purchasing for the sake of speculative reasons but to demand delivery on expiry at a time when refineries globally are shut, spot gold prices registered a slight decline yesterday with the gap between the two remaining wide as delivery of gold to US exchanges remained tested, and on its levels its 1^st Support level held on more than one occasion testing breakout strategies. Delivery of the Comex future contracts may require gold from outside the US and changing its weight to suit difference contract specifications, a difficult task in the current coronavirus storm that may translate into bigger gaps between different contracts globally on the same product.

IG client^* and CoT sentiment for Gold

Gold chart with retail and institutional sentiment

Silver Technical analysis, overview, strategies, and levels

Although silver prices finished higher and outperformed compared to gold which helped take the gold/silver spread to a lower finish for a fifth consecutive trading session, neither end of yesterday's key pivot points were reached. That has meant neither conformist nor contrarian technical overview strategies were in play given a lack of volatility in what is usually a volatile precious metal, with the biggest volatility amongst the precious metals experienced in palladium.

IG client^* and CoT sentiment for Silver

Retail bias here has dropped slightly but remains in extreme long territory at 90%, and where traders (both retail and institutional) await movement back up given they both hold significant majority long bias.

Silver chart with retail and institutional sentiment

Oil WTI Technical analysis, overview, strategies, and levels

As with silver, it was a relatively rangebound session for oil prices as well, failing to reach either of its key pivot points. In oil data, EIA’s (Energy Information Administration) oil inventories estimate showed a 1.6m surplus, and for the second consecutive week contrasting estimates out of API (American Petroleum Institute) which showed a slight deficit even as oil majors open the taps in the oil price war. While the US is attempting to end the oil price war by urging the Saudis to stabilize the oil market to aid its domestic oil companies, we have yet to see that translate into action with Russia also increasing its production at a time when oil consumption is plummeting thanks to the coronavirus. Any fresh significant news could aid conformist breakout strategies over contrarian reversals, especially with significant US data released today.

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IG client^* and CoT sentiment for Oil WTI

Oil WTI chart with retail and institutional sentiment

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am.

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