Wednesday, May 3, 2017

Schizophrenic gold market has highest level of long open interest since November while price continues to drop

Despite the fact that naked short contracts for gold (and silver) in the future's market continue to be dumped by a combination of bullion banks, hft algorithms, and perhaps even the Federal Reserve's own trading desk, open interest on the long side of the monetary metals continue to increase as well.  And while this buying has not been enough to keep the price from falling close to $50 over the past three weeks, geo-political events coupled with what appears to be a declining economy are leading investors to rush into gold at levels not seen since last November and following the Presidential election.

Investors continue to pour their money into the safe haven of gold, pushing net long positions of the precious metal to their highest level in five months. 
Amid rising tensions over the nuclear issue on the Korean Peninsula, surprise missile strikes in Syria and the first round of the French presidential election, investors have felt little need to pull out their assets out of the precious metal. Instead, a series of events have led net long positions of gold to reach 200,677 contracts, or 624.2 tons, as of April 25, up 2.5% from a week before, according to the U.S. Commodity Futures Trading Commission. The position marks the highest level since early November last year. 
Meanwhile tensions on the Korean Peninsula remain, as North Korea on Monday suggested that it would continue its nuclear weapons tests despite repeated warnings from U.S. President Donald Trump. 
While some concerns are lingering, other political risks are looming too. The latest one is the tax reduction plan proposed by Trump last week. The proposal, which would cut corporate tax to 15% from 35%, is seen as unlikely to win support, and "investors are questioning its viability," said Koichiro Kamei, a financial and precious-metals analyst. "Uncertainty is spreading over the Trump administration's ability to deliver on its promises, and it is making investors reluctant to let go of gold." – Asia Nikkei

0 comments:

Post a Comment