Weekly Market Report: Gold, Silver, & US Oil
Commodities end higher against weakened US dollar.
GOLD: Bull trend line and overview intact as expected easing aids non-yielding assets
While the pair’s daily technical overview continues to stall oscillating at the highs, the weekly overview is more bullish with all its technical indicators flashing green. The catalyst for the recent moves is a combination of geopolitical tensions that have failed to subside, as well as future rate cut expectations out of the Fed and monetary easing that’s plunging more global debt into negative-yielding territory. It has also pushed institutional bias into extreme long levels, but that bias has dropped over the past week on gold shorts rising 7.7K lots and a simultaneous drop in gold longs by 6.6K lots. As it stands, institutional bias is an extreme long 83%, while retail bias is little changed at a majority long 68% with longs not as enticed into closing out on anticipation of further price increases.
SILVER: Finishing only slightly higher as consolidatory levels hold
With the greenback in retreat and commodity prices rising, silver managed to finish the week in the green. What it was unable to do however, was shift its technical indicators significantly, with its price above all its main short-term moving averages but most of its remaining indicators neutral combined with a non-trending ADX. Institutional bias remains majority short at 58% having dropped a notch on a reduction in silver longs by 3.6K lots and an increase in silver shorts by 1.6K lots. The US dollar dictated the bulk of this pair’s price movement last week and may remain that way in the absence of a significant change in safe haven appetite.
OIL – US CRUDE: EIA deficit sends oil price surging as supply side worries persist
While demand for oil isn’t expected to remain bullish as industrial PMIs contract and global economic growth slows down, it’s the supply side worries from geopolitical tensions and a tropical storm Barry that is keeping the price bid. Furthermore, US inventories have been declining, with EIA’s 9.5M deficit last Wednesday a cause for concern, and Baker Hughes’ US oil rig count dropping to 784 from 788 prior. That runs contrary to IEA’s assessment on Friday that global oil stocks are set to rise over the next nine months, and in the process put additional pressure on OPEC to reduce output further as the US captures more market share. In terms of bias, retail bias is down 8% for the week on long profit-taking, while institutional bias remains an extreme long 81% on small reductions in both long and short positioning.
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