President Donald Trump is in The Gold Bulls Camp
$GLD, $SLV, $USD
Statements last week by US Treasury Secretary Steven Mnuchin put The Trump Team in the Gold Bulls Camp
Last Friday, Gold charged North for the 5th day running in heavy trade as the Trump-trade on financial markets begin to unwind, the USD weakens and interest rates in the US trend lower again.
Gold for delivery in April was the most active contract on COMEX New York with nearly 19-M oz traded b early afternoon, was exchanging hands at 1,261.10, bringing its YTD gainer to 9.5%.
Gold’s price is now at it’s the highest since 11 November, erasing much of its losses since Donald Trump’s election.
The Gold Bears had been making big bets that President Trump’s plans for fiscal stimulus, including his infrastructure spending program, will lead to strong US economic expansion, and higher interest rates.
With that some hedge fund managers moved aggressively out of Gold and into equities.
The Gold Bulls pointed to inflation arising from deficit spending by the Trump Administration, attesting to Gold status as a safe-haven against inflation and geopolitical uncertainty boosting Gold’s allure as good hedge.
Source: CME Group
US Treasury Secretary Steven Mnuchin last Thursday said that The Trump Administration’s proposed tax cuts and other stimulus measures would have a limited impact on the economy this year which pushed USD lower, the USD usually moves in the opposite direction of Gold.
A dovish FOMC statement last week convinced the bond market that rate hikes this year may be fewer than expected and may only happen later in the year ig then.
Gold produces no yield, so investors have to rely on price appreciation for returns, the metal has a strong inverse correlation to US government bond yields.
The Gold Bulls Camp: Gold was also buoyed by safe haven buying as uncertainty about upcoming elections in the Netherlands, France and Germany and the impact on the European Union.
Gold helped to drive May Silver contracts higher which were priced at 18.46 in afternoon trade in New York, + 1.5% from Thursday’s close. It is the 9th week running of gainers for the Silver’s price, the metal’s best weekly run of gains in more than a decade.
YTD Silver is up 13.7% and compared to lows hit January 2016, the Devil’s Metal has recovered more than 34% in value.
Hedge funds, aka managed money investors in bullion futures and options cut their exposure to the precious Yellow metal further last week according to COT data supplied by the US government (CFTC).
Overall Bullish positioning or net longs held by derivatives traders fell 10% to 6.7-M oz, that is well below July’s all-time record of nearly 29-M oz when bullion was hitting its 2016 highs.
Large scale speculation in Silver is taking a different tack with CFTC data indicating that traders added to long positions and cut shorts, bets that Silver can be bought back cheaper in future, at the same time. Net Bullish positioning has now reached the equivalent of close to 354-M oz, a 20-week high.
|HeffX-LTN Analysis for GLD:||Overall||Short||Intermediate||Long|
|Bullish (0.30)||Neutral (0.23)||Bullish (0.35)||Bullish (0.32)|
|HeffX-LTN Analysis for SLV:||Overall||Short||Intermediate||Long|
|Bullish (0.39)||Bullish (0.44)||Bullish (0.27)||Bullish (0.47)|