Housekeeping: Good Morning.
“The reset is a process, not an event.”
Today:
Discussion 1: Gold Dives On Record Chinese Holiday Liquidations
Discussion 2: Macro Traders Begin to Short Gold, Cover Silver
Analysis:
China Steps Back, Sells 1million Ounces Overnight, Macro Traders Step In
Yesterday marked the first session in some time that China did not open its trading day aggressively buying gold. We speculated this could be a signal—an overture to the United States—perhaps a gesture intended to soften the atmosphere for trade negotiations.
While we maintain that possibility remains valid, a more proximate and operational driver is now apparent as noted yesterday
China has begun selling gold, both at the ETF and futures level. This activity picked up last night and is directly tied to upcoming domestic holidays. This is not unprecedented behavior. As Goldman’s Trading Desk in Asia notes:
China liquidated what it bought last week ahead of Labour Day holiday resulting in total onshore positioning now 5% off the ATH. China’s share of total open interest remains on the highs at ~40%.
Breaking: China Steps Back, Sells 1Million Ounces Overnight, Macro Shorts Gold
China Steps Back, Sells 1million Ounces Overnight, Macro Traders Step In
Macro Traders Begin to Short Gold Cover Silver
If you're a macro trader and believe gold is stretched on the upside, one way to express that view is through inter-metal spreads. Specifically, comparing gold to silver and copper allows you to isolate the precious metal's safe-haven properties from the industrial-economic drivers that underpin the other two.
And as noted over the years: large institutions routinely run gold-versus-silver trades for profit, often on different timeframes and for different macro reasons. However, over the last two years, the dominant force has been central bank buying of gold. This dynamic convinced most of the market’s major participants that gold demand would structurally outpace silver. That view has largely been vindicated.
Full analysis available to Premium subscribers…
Featured:
Markets Recap:
The Dow and the S&P 500 ended higher, recovering from earlier declines after data showed the U.S. economy contracted in the first quarter for the first time in three years. Treasury yields were little changed. The dollar rallied against major currencies, while gold prices fell. Oil prices slumped after Saudi Arabia signaled a boost in production. Canada's main stock index closed lower, as a contraction in the domestic and U.S. economies intensified investor worries about the fallout from Trump's tariff policies.
Market News:
Caterpillar misses first-quarter estimates, flags tariff hit to annual sales
Google hopes to reach Gemini deal with Apple this year
Trump says IBM, Raytheon may get US contract to modernize air traffic control system
Hess beats first-quarter profit estimate despite weak oil prices
Full stories and recaps in premium…
Data on Deck:
MONDAY, APRIL 28None scheduled
TUESDAY, APRIL 298:30 amAdvanced U.S. trade balance in goodsMarch--$147.8B8:30 amAdvanced retail inventoriesMarch--0.1%8:30 amAdvanced wholesale inventoriesMarch--0.3%9:00 amS&P Case-Shiller home price index (20 cities)Feb.--4.7%10:00 amConsumer confidenceApril87.792.910:00 amJob openingsMarch7.4M7.6M
WEDNESDAY, APRIL 308:15 amADP employmentApril110,000155,0008:30 amGDPQ10.4%2.4%8:30 amEmployment cost indexQ11%0.9%9:45 amChicago Business Barometer (PMI)April45.547.610:00 amConsumer spendingMarch0.5%0.4%8:30 amPersonal incomeMarch0.4%0.8%10:000 amPCE indexMarch0.0%0.3%10:00 amPCE (year-over-year)2.2%2.5%10:00 amCore PCE indexMarch0.1%0.4%10:00 amCore PCE (year-over-year)2.5%2.8%10:00 amPending home salesMarch1%2%
THURSDAY, MAY 18:30 amInitial jobless claims226,000222,0009:45 amS&P final U.S. manufacturing PMIApril--50.710:00 amISM ManufacturingApril47.849.010:00 amConstruction spendingMarch0.3%0.7%TBAAuto salesApril17.2%
FRIDAY, MAY 28:30 amU.S. nonfarm payrollsApril130,000228,0008:30 amU.S. unemployment rateApril4.2%4.2%8:30 amU.S. hourly wagesApril0.3%0.3%8:30 amHourly wages year over year--3.8%10:00 amFactory ordersMarch3.4%0.6%1
Summary and Final Market Check
