Gold and silver futures are retreating in aftermarket trading on Monday after posting three week highs at the end of last week. Geo-political tensions were cited as one of the reasons for both silver an gold to trade up and through their 50 , 100, and 200 day moving averages on Friday October 13th. Gold settled on Friday at 1304.6, but posted a slightly lower close at 1303.0 today. Silver settled 1741.1 on Friday but also posted a lower close at 1736.5. However there has been some long liquidation in the market that has sunk gold below 1300.0, to the 1295 level, while silver sits at 17.19 as of this post. Trader psychology since the job report on Friday Oct 6th has continually priced a move lower in the dollar and has subsequently bought metals as a reflation hedge. Also helping metals bulls were positive economic data readings from China that shows their economy expanding in the second half of this year as their latest PPI readings bested expectations. This has aided copper prices and the energy sector as the Chinese economic data hinted that then data would spill over globally, igniting inflation. Aside from all of this there continues to be some small tremors in the market regarding geopolitical worries over North Korea, and the Trump administrations threats to breakup the Iran Nuclear deal. Geopolitical uncertainty continues to reign all over the globe and therefore the precious metals and energy sectors the recent beneficiaries.
Long positions continue to reenter the metals sector on this push. As of late last week, longs in gold total 270 K contracts, while in silver it pushes upwards of 75 K contracts in my view. The dollar the last few sessions looks like it has forged a near term bottom but will need to hold last weeks lows to hold the formation intact. If the Dollar can sustain a rally it would look to pressure gold and silver in the near term. Technical’s for the remainder of the week come in as follows. For December gold, support is down first at 1285.0. A close under and 1267 is next. Resistance sits at 1313.7. A close over here for the week and the market trades up to 1324.4. For December silver, support is down at 1696.6. a close under and 1652.3 is next. Resistance is 1765.1. A close over here and 1789.3 in the next level to the upside.
I hold a weekly grain webinar each Thursday at 3 pm central time. Please click on the link below for signup and a recording link sent to your email