GOLD / SILVER
A lack of significant reaction in gold to weekend rumors of financial trouble at credit Suisse, highlights the markets inability to embrace classic flight to quality concerns. In a very minimal demand benefit, the Indian government reduced the gold and silver import prices subject to importer taxes and perhaps some of that discounting will be passed on to consumers. However, December gold last week finished $46 above the lows last week and that might discourage bargain-hunting buying. On the other hand, with the most recent COT gold positioning report from September 27th registering the lowest net spec and fund long since early December 2018 and the market from that level into the low last week falling $24, the net spec and fund long could be approaching modern day trading lows. Gold positioning in the Commitments of Traders for the week ending September 27th showed Managed Money traders net sold 8,334 contracts and are now net short 41,300 contracts. Non-Commercial & Non-Reportable traders are net long 56,999 contracts after net selling 15,175 contracts. Similarly, the net spec and fund position in silver is fresh off a “net short”, and therefore a portion of last week’s late recovery was likely short covering/profit-taking in the wake of a 180-degree shift in outside market influences. The Commitments of Traders report for the week ending September 27th showed Silver Managed Money traders net sold 992 contracts and are now net short 8,087 contracts. Non-Commercial & Non-Reportable traders net sold 290 contracts and are now net long 6,503 contracts. Unfortunately for the bull camp, outflows from silver ETF holdings last week were robust at 5.2 million ounces in a sign that investors remain cool toward silver.
PALLADIUM / PLATINUM
The most recent positioning report showed Palladium maintaining a net spec and fund short which is likely a combination of residual bearishness by investors and those fearing recession. The September 27th Commitments of Traders report showed Palladium Managed Money traders are net long 326 contracts after net buying 26 contracts. Non-Commercial & Non-Reportable traders net bought 25 contracts and are now net short 1,236 contracts. However, the trade is aware of the potential for supply limiting exchange rules aimed at Russian supply and that could suddenly result in an upside breakout in palladium to the highest level since mid-summer. Like the palladium market, the platinum market continues to see the net spec and fund long position reduced with the net spec and fund long position, hovering near the lowest level in 4 years. Platinum positioning in the Commitments of Traders for the week ending September 27th showed Managed Money traders net sold 4,953 contracts and are now net short 6,955 contracts. Non-Commercial & Non-Reportable traders net sold 3,412 contracts and are now net long 2,576 contracts.
With weeklong holidays in China potentially sapping the market of bargain-hunting buying and ongoing global recession fear, the bull camp was fortunate to see news last week that Chilean August copper output declined by 9.4% over year ago levels. It should also be noted that Shanghai copper warehouse stocks fell by 6,438 tonnes or 17.4% in a single week. The markets also saw cash market estimates of a decline in available physical copper inside China of 10,000 tonnes on the week. Limiting the copper market on the upside are comments from Goldman last week discounting the potential of the situation in Russia creating significant tightness in the global copper and nickel markets. Fortunately for the bull camp, the net spec and fund short in copper remains extreme near the largest level in 2 years which could increase the odds of respecting the late September low down at $3.2430. The Commitments of Traders report for the week ending September 27th showed Copper Managed Money traders are net short 10,592 contracts after net selling 6,480 contracts. Non-Commercial & Non-Reportable traders were net short 27,385 contracts after increasing their already short position by 6,487 contracts.
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