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Go Go Gold!

16 April 2021

The gold price has made a strong recovery this week, racing to hit the Weekly Cloud base at US$1760, where the gold rally has met resistance in recent weeks.

Gold has benefitted through much of the week from the ongoing weakness in both the US Dollar and further declines in the 10-year bond yield. Although the last 48 hours have seen the US Dollar Index rise within the daily trend channel, strength in bonds has caused the 10-year yield to decline from 1.7015%  on Tuesday to a low of 1.5268% on Thursday, helping boost gold higher. Statements by the Fed that the end of quantitative easing will long precede that of tightening helped yields decline. So too did the uncertainty regarding the end of support for the economic recovery highlighted when Fed Chair Powell admitted ‘ I don’t know when that’s going to be…’.

The action in gold and bonds can be summarised as the ‘reflation trade’ pausing for a break after the action since the first quarter of the year.

Position-wise, gold investor positioning on futures has increased substantially to 12.156 million FTozs long by the 6th of April (according to the available information). Short positioning on the CME declined to 5.509 million, with a 1.485 million decrease in the week ending the 6th of April.

ETFs appear to have stabilised around 99.50 million Tozs, stemming the outflow seen more or less since the beginning of January. 
Since the 6th, Open Interest has not changed significantly, with only a slight decline. Given the rise in price since the 6th, a reduction in open interest implies short covering. 

Posotion information from the 13th of April will be published Friday night NY time so will be available over the weekend and referenced in next week's report. 

Gold price action suggests a move to US$1784 if the current resistance level can be breached.

Gold found good support at the US$1670-1690 band and recovers to re-test the Weekly Cloud base.

Silver’s recovery faces intraday resistance at US$25.95 from the weekly Standard Line and US$26.20 from the Daily Cloud base.  We are glad to see that the medium-term uptrend continues.

Position-wise, silver had an inflow of 9.50 million Tozs CME Managed Money Longs. Managed Money shorts declined by 8.50 million in the week ending the 6th of April. ETF positioning grew slightly to 922.8 million.

Silver price action suggests a move to US$27.00.


Recovering well, silver sees some resistance from the Weekly Standard and Turning lines.

The Australian Dollar
The AUD had a strong week as the Dollar index weakened, despite some weaker than expected Chinese data.  Chinese Fixed Asset investment and Chinese Industrial production both came in weak although retail sales were better than expected. That should be put into the perspective of China growing by 18% year on year in Q4.
Locally, the jobless rate moved to 5.60%, employment rose by 70,700 however 20,800 full-time jobs were lost. The key levels here are 0.7850 then 0.7960.

Support at 0.75. The AUD has had a strong week. Resistance at 0.777.