[W]e maintain a defensive allocation in our model portfolio, with an UW in equities and credit vs. OW in cash and commodities….We additionally increase our allocation within commodities to gold, both as a geopolitical hedge, and given an expected retracement in real bond yields
-JPM below
Good afternoon. Busy morning. Should be worth the wait.
Contents:
Gold Comment
Geopol Recon
Reports
1- Gold Comment
Gold bottom line. Gold short CTAs covered mightily Friday and Monday. Silver did not cover and may have actually added Monday! Silver CTAs seem hellbent on retiring rich or extremely poor this month.
Suggests next leg higher will be started by Silver. And people who want goldexposureduring war will sometimes sell silver for flat margin expsoure ad nhedging economic risk of war.…. happens alot in first leg of a crisis. Remember, first rally in Ukraine last year, Goldlead, Silver rallied harder later. Not predicting.. but that is how it happens sometimes.
Gold prices are still holding firm following last week's epic algo stop-out. However, the margin of safety is narrow against a whipsaw in CTA positioning, with a break below the $1925/oz range in futures likely to spark a notable selling program.
Still, subsequent CTA selling activity appears unlikely above the $1875/oz range, suggesting that the yellow metal's prices won't easily revisit the lows marked by the selling activity that took place into Golden Week celebrations.
Meanwhile, subsequent algo buying activity north of $1965/oz could still extend the pain trade for gold shorts, and the resilience in the yellow metal's prices appear to have sufficiently lifted silver to spark CTA buying flows. Notwithstanding, algo buying activity is likely to remain modest at best in the white metal until prices break north of $23.70/oz.
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