Overstretched Speculative Funds Reduce Precious Metals Bullish Exposure
Andy Farida | Sep 25, 2017 11:31
Gold
Everything has its limit - iron ore cannot be educated into gold. Mark Twain
Overall Sentiment
- Market taking risk by second guessing the Fed’s true intention
Speculative funds positioning
- Net long cut their exposure as 1358 attracted profit taking activity but shorts were covering as well – they seem under pressure and decided to bail
Bullish perspective
- There is sufficient rooms for funds to exert higher through recent price weakness
Bearish perspective
- Dollar index revival in progress although it may be temporary
- Recent weakness may encourage speculative longs to reconsider their exposure
Conclusion – Fed to begin balance sheet normalisation in October but dead set on another rate hike in December
h3 XAU/USD/h3Silver
If I have cash and I can't figure a way to put it into real estate or my business, I hold it in gold and silver. Robert Kiyosaki
Overall Sentiment
- Technical weakness has prevailed and the weekly chart showed why bulls are struggling for now
Speculative funds positioning
- Net long cut their bullish exposure in what seems like a profit taking near the high – shorts regained confidence and added to their bearish exposure – the cycle seems to have turned
Bullish perspective
- Silver found support off the 20 WMA and if support holds, we could see it turning higher again
Bearish perspective
The break below 20 WMA should give way to further selling pressure
Conclusion – With short-covering rally pretty much run its course, the upside looks limited unless fresh buyers come in
h3 XAG/USD/h3Market moving events this week
- Fed to commence balance sheet reduction – $10 billion every quarter
- Precious metals gave way to stronger dollar
- Risk assets initially turned south but has since recovered stronger
- Inflation is expectation is toned down – the Fed downplayed the impact on the economy from Hurricane Harvey and Irma.
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