Conflicting news on tariffs roll back created a very volatile week for gold and silver. Ahead of Thursdays additional weakness the net longs in both had been cut primarily through increases in gross short positions. In gold the gross short jumped by 15% to 31k lots, a 22-week high. Both metals have been challenged by the recent rise in bond yields which have cut the total amount of negative yielding debt globally to $11.6 trillion, a one-third reduction since the August 28 peak. The improved outlook for has also led to a reduction in U.S. rate cut expectations.
Despite its worst weekly decline since November 2016 gold has yet to break any major technical levels. Using retracement levels from the run up since May the levels we focus on are $1448/oz, $1413/oz and most importantly $1380/oz, the range top between 2014 and June this year.
Continued copper buying reduced the net-short to 18k lots, the lowest since April 30. Another sign that the market is sensing a change in the outlook and with that reduced appetite from macro funds to hold short copper positions as a hedge against an economic slowdown. However having failed last week to break above the 200-day moving average at $2.7280/lb and with the speculative short much reduced the short-term outlook could now become more challenging.