“Everything has its limit - iron ore cannot be educated into gold.”
Overall Sentiment
- There is little sign of de-escalation on the Korean peninsula
Speculative funds positioning
- Short-covering action may have run its course but gross longs are starting to look a tad overstretched
Bullish perspective
- Mild pullback and resilient price action suggest that bulls are in control
Bearish perspective
- Put in a rather bearish weekly candle
- Could this be the start of another leg lower to test key technical support
Conclusion –There is profit taking ahead of US FOMC meeting but market participants expect little fireworks
XAU/USD
“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.”
Overall Sentiment
- Investors reduced haven demand somewhat last week – dollar/yen giving early sign of diminished need for flight to safety
Speculative funds positioning
- Gross long are getting bolder as they increased their bullish exposure for the third week running
- CFTC speculators continue to reduce their bearish exposure – should underpin silver prices
Bullish perspective
- It has successfully broken above the weekly downtrend line – that is bullish
Bearish perspective
The white metal put in a rather bearish weekly candle – follow up selling has materialised
Conclusion – Although it started to look bearish, we continue to see silver consolidating first from recent gains before testing higher
XAG/USD
Market moving events this week
- European market focuses on German election
- Expect volatile price action ahead of US FOMC
- Dollar index has recovered somewhat – CFTC managed money indicate unwinding in process
- BoE latest to indicate that stronger inflation data encouraged the need to raise interest rates
- ECB to follow perhaps before end of the year
S&P 500
US Dollar Index
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