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Rising Dollar And Bond Yields Do Not Deter ETP Investors

BySaxo Bank
AuthorSaxo Bank
Published 11/11/2013, 04:48 AM
Updated 03/19/2019, 04:00 AM

Recent economic events and subsequent reactions in financial markets have not been favourable to gold over the past couple of weeks. After nine consecutive weeks of reduction in total holdings of gold in exchange traded products (ETPs) the flow actually turned slightly positive last week, according to Bloomberg. This development is quite interesting, considering the non-friendly environment being created by the better-than-expected growth and employment data from the US last week, which helped drive bond yields and the dollar higher.
ETF Holding
This potentially shows that institutional investors have now either left the metal or reduced their exposure to acceptable levels which removes one of the key groups of sellers seen this past year. For gold to shine, however, we also need speculative traders such as hedge funds to engage. They actually cut their net-long futures and options positions by 12 percent during the week ending November 5, according to the CFTC and further reductions would have been seen, considering the weak price action witnessed in the last week, especially on Friday.

All is not lost however and I would actually have expected a bigger drop than the one we saw on Friday considering the important technical break below USD 1300/oz. Trend-line support from the June low at USD 1,269.5/oz and the October 15 low at USD 1,251.8/oz currently represents two lines in the sand, although a test can not be ruled out, considering the negative momentum currently seen. Intraday short sellers will probably be content with their current positions as long as we stay below USD 1,294.5/oz. which is today's pivot.
Gold Held
Silver Held

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