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ABC Bullion

Did big money just bet on gold?

19 November 2021

Gold has room to runShae Russell

Friday 19 November 2021

In this week's market report:
  • Gold stays afloat
  • Did big money just get bullish?
  • Australian gold price stays up as Aussie dollar oscillates:
  • Silver investment tipped to jump 32% this year
  • Gold: People should prepare for further upside says expert
  • Inside the office this week

Dear Investor,

US dollar gold price [XAUUSD] Daily chart

(Click to enlarge)
Source: Trading View

Gold stays afloat: Gold pauses this week after last week’s rally. While the yellow metal did give the US$1,870 price level a nudge on Wednesday, it’s dipped back to US$1,859 at the time of writing, leaving us with a gain of 0.50% for the week.

Retest or retrace? As gold bobs along in the US$1,850-60s, this sideways trend may have another week or two left before either breaking out higher or lower. The long-term uptrend remains intact, however we have short term targets to meet first.
  • Bulls, we crab walk: It didn’t fall and it didn’t go up. Gold managed to hang onto its gains, however the price is going sideways this week. Don’t be disheartened though, spot gold has given us the chance to take a breath. There’s room for the metal to run to up to the US$1,920s…
  • …but the Bear may win the short term tussle: A look at the spot gold price using the weekly cloud tells us the Bulls may to struggle to break through US$1,870s for the moment. But anything below the US$1,820s is unlikely to last.

What about the other precious metals? The ‘ups’ across the board from last week didn’t follow us into this week.   
  • Silver came off the boil, down 2% to US$24.80 per ounce.
  • Platinum enjoyed a rally on the back of the Glasgow Climate Change conference (COP26 as it’s called by the media) but the rally didn’t stick. Pt was down 3% in the past seven days.
  • Palladium unlike the other precious metals has had a good week, up 3% at the time of writing. It did surge higher on Wednesday nearing US$2,220 per ounce but has settled back to US$2,142 per ounce today.
Did big money just get bullish on gold? It’s week-old data now, however the leaps in Managed Money, physically backed exchange traded funds (ETFs) and Open Interest on COMEX are worth noting. In the week to 9th November:
  • Open Interest for gold futures on COMEX jumped by 10.2 million ounces
  • Managed Money net longs increased by 4.74 million ounces.
  • Shaking off the down trend in October, physically gold backed ETFs increased with 183,000 ounces added (week ending 2.
Australian gold price stays up as Aussie dollar oscillates: The Australian dollar continues to oscillate, down to 72.79 US cents, down 0.10% since last week. The Australian dollar gold price reflects both the US dollar gold price and the value of the Australian dollar when measured against Greenbacks. Earlier in the week I explained how this relationship works.  
This means even with minimal gains in the spot price of gold, the falls in the Australian dollar have supported the Australian gold price, keeping it elevated at AU$2,555 per ounce.

Australian dollar gold price [XAUAUD] Daily chart

(Click to enlarge)
Source: Trading View

RBA pushes the Australian dollar down: This week the Australian dollar dipped to a six-week low on the back of ordinary wage price data, and the November minutes from the Reserve Bank of Australia (RBA).
  • Wage growth only increased by 0.6% at the end of September quarter, bringing the year-on-year figure to 2.2%, which was expected.
  • Rising to 2.2% puts wage growth back at pre-pandemic levels
  • In addition, the RBA is rather dovish in that they are steadfast in their view that Australia is not experiencing inflation like similar advanced economics, and that ‘global goods demand would ease over the coming year or so, around the same time that more goods supply came on line. This could see price pressures in global goods markets dissipate and lead to lower inflation outcomes in Australia.’

Silver investment tipped to jump 32% this year…

The Silver Institute has released a report painting a rather bullish picture for silver, much to the delight of silver bulls. The institute highlight that demand for the ‘other’ precious metal will be coming from all pockets with a modest silver deficit this year of around seven million ounces, the first since 2015. Highlights below:
  • ‘Global silver demand is set to reach 1.29 billion ounces, the first time it has exceeded 1 billion ounces since 2015.
  • ‘Physical investment in 2021 is on course to increase by 32%, or 64 Moz, year-on-year to a six-year high of 263 Moz.
  • ‘The strength will be driven by the US and India. Building on solid gains last year, US coin and bar demand is expected to surpass 100 Moz for the first time since 2015.
  • ‘Overall, physical investment in India is forecast to surge almost three-fold this year, having collapsed in 2020.
  • ‘In 2021, mined silver production is expected to rise by 6% year-on-year to 829 Moz. This recovery is largely the result of most mines being able to operate at full production rates throughout the year following enforced stoppages in 2020 due to the pandemic.
  • ‘Strong silver and byproduct metal prices this year have improved profitability in the silver mining sector despite rising input costs.’

Gold: People should prepare for further upside says expert…

Why isn’t gold at US$2,000 per ounce? Why isn’t gold surging as inflation rises? These are the questions Bloomberg recently put to Goldman Sachs head of Energy Research Damien Courvalin.

Jokingly (I hope) Courvalin calls gold ‘the poor man’s crypto’, but quickly points to how gold has lagged real rates increasing, and then notes that there is plenty of room for upside in the yellow metal heading into the New Year. It’s a good interview and you can watch it here.

Inside our office this week…

Our dispatch department tells me this week an interesting combination has been ‘flying’ out the door.
Silver coins have been extremely popular, as well as ½ oz ABC Bullion Cast Bars.

Both, of which I conveniently happen to have on hand. Silver coins are often popular around Christmas as they are perfect gifts for the person who has everything.

Over the years I’ve found that ½ ounce cast bars are a great way to increase your exposure to gold, if you want to top up in small amounts. Or, if you’re new to precious metals, these ½ cast bars are an excellent sub AU$1,350 entry point to the world of precious metals.
Don’t be fooled, these ½ cast bars may be small, but they are mighty (roughly the size of a key on your board). After all, gold is one of the top ten densest metals on Earth!
Until next time,
Shae Russell
Group Communications Manager, 
For ABC Bullion