Gold Prices Rebound $70 from Comex's Post-Election Slump
Monday, 11/18/2024 14:57
GOLD PRICES rebounded on Monday after suffering their worst week in 3 years while the US Dollar steadied at a 2-year high on the currency market amid a fresh stand-off between Russia and the outgoing Biden administration in Washington over Western military support for Ukraine,
writes Atsuko Whitehouse at BullionVault.
Spot gold prices for London settlement rose as much as 2.8% to $2609 per Troy ounce, over $70 above Friday's early low and recovering more than 1/3rd of last week's post-US election decline following Donald Trump's decisive win.
That $120 slump took London bullion quotes down to a 2-month low with
the worst weekly gold price drop since June 2021 as the US Dollar soared on the currency market.
Latest data say that by last Tuesday, a week after Trump's win, hedge funds and other leveraged speculators in Comex gold futures and options had further reduced their bullish positions on gold while increasing their bearish bets.
Overall, that put the net long position of Managed Money traders in Comex gold derivatives 17.2% above the previous 52-week average. But it sank by 11.0% in notional gold terms – the 3rd consecutive weekly decrease – down to the lowest since early August at the equivalent of 614 tonnes.
November 2016 saw the Managed Money's net long position drop by 1/4 in the week after the Republicans won that year's presidential election, falling to the notional equivalent of 411 tonnes before continuing to shrink for 7 weeks more as
gold fell contrary to analyst forecasts following Trump's first victory.
Speculative net bullish positioning in November 2020 also fell in the week following President Joe Biden's election, shrinking by almost 1/10th to 345 tonnes but rebounding in the week after.
"An election result takes an element of risk out of the markets," says Rhona O'Connell at brokerage Stone X Group Inc.
"Gold has [now] recovered on geopolitical concerns, a stabilising Dollar, and a lighter speculative long, leaving room for fresh buying," reckons derivatives platform Saxo Bank's commodity strategist Ole Hansen.
Today the Dollar Index – a measure of the US currency's value against its major peers – held at its highest level since November 2022 after adding 1.4% last week with its 7th consecutive weekly gain in a row.
Joe Biden at the weekend authorized Ukraine to use US-made weapons for deep strikes into Russia according to press reports quoting unnamed officials, but the White House and US State Department declined to comment.
The Kremlin says that strikes by US-made weapons on Russian soil would be considered direct NATO involvement in the conflict.
Gold priced in British Pounds today rose 1.4% to £2059 per Troy ounce after losing 2.2% last week, while Euro gold prices gained 1.3% to €2463 per ounce, recovering from a 2.5% decline.
Silver, primarily an industrial metal today, rose 4.8% from Friday's low to hit $31.12 per Troy ounce, reversing almost all of last week's 3.9% drop.
"After the sharp decline since the US elections, gold has entered a more affordable range," says one portfolio manager, calling current action "a buy-the-dip story more than anything else."
Western trust funds backed by gold expanded on Friday as the bullion price bottomed and rose from $2537, with the giant GLD product traded in New York growing by 0.3% with its first daily inflow of investment money in over 2 weeks.
Retail dealers in India, the world's second-largest bullion consumer nation, meantime
reported better demand on last week's price drop, with new imports incentivized by premiums over London prices climbing to $16 per Troy ounce, near a 4-month high, from $3 the previous week.
Gold No.1 consumer China, in contrast, today saw prices on the Shanghai Gold Exchange (SGE) widen their discount to London quotes, reaching $14 per Troy ounce and signalling weak domestic demand versus supply.
Historically, gold prices on the SGE have traded above London quotes, encouraging new bullion imports with an average premium of around $8 per ounce.
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