Wednesday, May 17, 2017

Gold Prices Shine Differently from Post Election

Gold is higher by over $20 this morning as the market digest the latest in a continuing revelation and disruptive forces confronting the US Executive branch.  At the end of last year (Dec, 30), I penned a note ‘Time to Be Constructive on Gold Prices’ when I had switched from bearish since last May, in small part because President Trump seemed to be embroiled in a controversy surrounding Russia.  As indicated likely at that time, this has not gone away.

Gold is higher by roughly $100 since year end and still $40 below the recent mid-April high.  Gold crossed back above the 200 day moving average today.  Positioning conditions favor additional gains as CFTC described ‘non-commercial’ accounts have reduced their already modest bullish position in the last two weeks.  It was positioning conditions that were a strong prompt in my bullish recommendation at year’s end as so called ‘large spec’ had finished bullish position paring that had peaked along with prices in July. 

There have been three modest retreats in prices since the advance beginning at the start of this year.  Each of these pull backs had successively higher lows.  This too is constructive and we would at this point expect additional interest in bullish positioning by both ‘large speculative’ accounts and individual traders as well.  There is plenty of room above before we would consider conditions as overbought in the short run and we are very far away from what may be considered overbought in the longer run.  



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