Safe haven commodities’ gold and silver lag, oil outperforms
Gold and silver both retrace off the highs against the greenback, while a delay in US tariffs on some Chinese goods sends energy and commodity inputs soaring.
GOLD: Retracing off the highs as tariff relief spooks safe haven products
Gold rarely finishes higher when it’s a classic risk-on event in equities, as the safe haven product took a hit alongside the underperforming yen and franc to finish lower against the greenback. While the tariff is only a delay, it has been viewed as a step away from worsening trade tensions, though failing to prevent the inevitable as both US and China have yet to edge closer to agreeing on a way to end the current trade war. That, combined with easing expectations (and action) from central banks, means the non-yielding asset has the potential to remain bid. In terms of bias, retail sentiment remains majority long at 63%, while institutional bias is 2% higher at an extreme long 86% thanks to an increase in gold long positioning by over 38K lots and little change in shorts.
SILVER: Mimicking gold’s move and finishing lower against the greenback
As with gold, it was a fresh high for the pair followed by significant retracement that ended with a lower finish against the greenback, and in the process testing its bull trend that has been stalling close to the highs with nearly a week of oscillatory movement and the failure to show momentum to the upside. Fresh tariff relief may be the catalyst, but retail bias has instead inched higher to an extreme long 91%, even as institutional bias dropped 5% to a more modest heavy long 65% on an increase in silver shorts by 9.2K lots and a simultaneous reduction in silver longs by 5.2K lots.
OIL – US CRUDE: A fourth consecutive day of gains, the latest buoyed by an ease in trade tensions
Trade tensions dropped for a change, and that has certainly aided commodities in rising off recent lows, including this energy commodity. API’s 2.2M deficit of US oil inventories yesterday certainly didn’t hurt its price, as the strain on the supply side has failed to subside even as global demand weakens. EIA’s estimate is set to be released later today expected to show a similar 2.5M deficit. From a technical standpoint, a positive DMI cross occurred yesterday, and its price closed back above both its 200-day and 50-day moving averages but failing to undo a slight bear trend channel forming if prices can’t rise further from these levels. In terms of sentiment, retail bias has dropped 8% on long profit-taking to a slight long 54% and is on the verge of shifting back to a majority short bias if another significant price increase occurs, while institutional bias remains at extreme long territories at 77% despite an increase in shorts by 12.3K lots.
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