Yesterday went very well. Gold had its 3rd day in 2 weeks with a rally above 2% and no subsequent smackdown yet. Yesterday saw Gold almost outperform Silver, also a good sign. Silver leads in initial rallies. Gold has to catch up and take leadership for it to be a metals rally and not just a Silver short covering thing.
Given the moves in stocks, greedy metals people can almost say the rally was too weak. Just know there were far more shorts in CTA land in stocks than in gold and Silver. This is not done yet. But the most aggressive/ panicked part may be near end. Hard to tell.
Moor Technicals: He called it so far. We will have a very good announcement later today in our podcast for traders
Shorts are exiting Silver, just getting started in Gold
Bearish notes:
China is not reopening is on the table and will be cited as reason for a sell signal. More likely is the Fed talking things down again as it is still obvious to us they will continue raising rates despite the hope of more QE. That will kill stocks, and in this part of the cycle, weigh on metals.
Carefully bullish comment:
While it is not buy season, we do note that banks are likely to buy before it starts sometimes if they suspect reasons to do so. On that note- Goldman is starting their Supercycle thing again. And the more they are right, the more they press. With oil doing its thing (despite yestrerday) and copper also strong, it could get hairy
TD REPORT AT BOTTOM…
Excerpts:
Several reports are talking1 gold again, albeit in passing. MUFG and HSBC were a good read.
Mitsubishi Bank: “And Yet it is Outperfoming”
Our favorite line is the “…yet it is outperforming” parts about Silver. Which speaks volumes given they are bearish, yet do not dismiss the strength as temporary or silly. That means eyebrows are being raised a little.
GOLD: Gold and silver have surged above USD1,700/oz and USD21/oz, respectively, with their outsized rally reflective of the sensitivity to the USD peak narrative.
Notice: They Updated their report, but not their chart.
SILVER: Silver has rallied with gold on a weaker USD, with the front end breaking through USD21/oz. fundamentals suggest that lower real rates and a weaker USD should weigh on silver yet it’s outperforming.
CONTINUES AT BOTTOM…
HSBC: “The reasons are hard to discern”
HSBC gives a thoughtful explanation on why Gold should not be rallying like it has. We like their approach. No reasons make sense to them. But they acknowledge something is a wry.
The reasons for the rally – beyond the USD drop – were hard to discern. … The gold rally was not aided by the price behaviour of other commodities outside other precious metals, as oil and other commodities dropped…
