Weekly markets round-up for StoneX Bullion

Welcome to a very brief overview of the recent performance in the markets. The essentials are captured in the table below and each week we will show a chart of interest.

We would not be surprised to see reduced activity in the gold and silver markets over the coming fortnight as the markets watch every nuance of the Presidential election. This could lead to volatility in prices as they tend to move more erratically in thin conditions.

Gold has been very much a trading range for some weeks now, effectively between $1850 and $1950 over the past five weeks. The driving forces have in the main been supportive, but the Presidential election, the interminable struggle over the United States virus recovery talks between Nancy Pelosi (Speaker of the House) and Treasury Secretary Steven Mnuchin, along with the equally tortuous Brexit negotiations, professional money managers have been largely side-lined.

This is reflected in the Commitment of Traders numbers on COMEX and within the ETF figures. On COMEX, after some sizeable long liquidation and increase in short positions in the week to 22nd September, when gold had sustained a near $70 drop, there has been little movement among the long-side money managers – just very light attrition over the succeeding four weeks; while there was a sizeable drop in short positions, which have then edged higher again. As a result, last Tuesday’s net long of 254t was the smallest since three weeks previously, but only by one tonne and those two weeks, at 254 and 253 tonnes respectively, were the smallest net longs since May 2019, suggesting that there is very little speculative overhang in gold.

Gold ETFs have generally been nudging higher and last Thursday was a fresh record high. There was some liquidation on Friday, as there was also in silver and platinum, but on balance the mood remains favourable towards gold, reflecting the uncertainties in the markets.

Silver has also been trading in a sideways pattern, in what for this normally volatile metal has been in an exceptionally tight range between $22.50 and $25.50 since the end of September. From a technical standpoint silver is forming a triangle, which normally means that we can expect a break-out in the coming weeks.

Given that we expect the outcome of the Presidential election to be bullish for gold, regardless of the outcome (more on that next week), this should point to an upward break out for silver – but this is a longer-term view and does not constitute an expectation of a fresh bull trend starting immediately in November.

Silver — Recent Price Action