Weekly Technical and Precious Metals Positioning Report - Gold - 4th April 2018

Gold takes support from the Weekly Ichimoku Standard Line (US$1301) but has yet to overcome the important US$1366 level. Protectionism is the theme for gold’s current strength after Chinese retaliation over 128 mainly agricultural imports from the US.

Targets: medium term look for US$1382 still, then US$1389 basis shorter-term point and Figure targets. A break of the recent highs also suggests US$1410-1420 basis the sideways trading seen since the end of January. Above, US$1360, recent downside targets will disappear.

Major support at US$1301 from the weekly Ichimoku Standard Line. Resistance lies at US$1366 and US$1376.

CME positioning that Managed Money length grew by 3.493 million FTozs, the first growth in a month after a period of steady reduction. Shorts reduced by 1.54 million in the same week. Trading in the week of the 20th March to the 27th of March took place at a VWAP of US$1336.17. Since the 27th, total open interest dropped by around 300,000 FTozs, suggesting some profit-taking/long liquidation after Tuesdays high as the Dollar rallied.

I still believe that the Dollar (DXY) outlook in the short(-er) term angles towards 94. However, 90.70-90.80 presents intermediate resistance. Meanwhile the macro picture remains bearish.

The outlook for 10 year yields suggests strengthening of bond prices, with targets to 2.59-2.60 and some outliers to 2.35 pct. 10 years should find resistance at 2.60 pct.

Silver continues to range, with the price in USD locked below the Daily Ichimoku cloud. Resistance lies at US$16.66 and US$16.82.

Above US$16.20, look for a recovery to test the top of the cloud at US$16.82. Otherwise, medium-term targets suggest further weakness for silver, although my gut feeling is that the medium-term outlook for silver is a coin toss, and that bullish action in gold will help silver higher, especially from the current weak ratio around 81.
 
CME positioning in the week up to the 27th March saw Managed money longs reduce 3.06 million Tozs. De-leveraging in March has reduced silver MM longs by 45.25 million Tozs in total, to 160 million. Shorts reduced by 10.90 million, with the futures VWAP between the 20-27th March US$16.50. Net positioning remains short 171.32 million Tozs, after declining 512 million Tozs over the last four and a half months.  This is still about the shortest that net positioning has been since 2008, so it looks tempting to look for evidence of a dip to buy.

Nicholas Frappell
General Manager


Disclaimer
The information contained herein is based on data obtained from sources believed by ABC Bullion to be reliable. However, such information has not been verified by, ABC Bullion, and ABC Bullion does not make any representations or take any responsibility as to its accuracy. Any statements of a non-factual nature constitute only current opinions, which are subject to change without notice. ABC Bullion (and/or its affiliates) may have positions in commodities referred to herein, and may hereafter liquidate such positions. Neither the information in this report, nor any opinion expressed, shall be construed to be, or constitute, a recommendation or an offer to buy or sell, or a solicitation of an offer to buy or sell, any commodities or other financial products mentioned herein.