Gold Bullion Near Record High, 'Spotlight' on Silver Price Amid Comex Bullish Bets
Monday, 6/03/2024 15:29
GOLD BULLION steadied on Monday after registering a new record month-end price in Dollar terms, while silver prices hovered around what technical analysts called 'support' at $30 per Troy ounce after speculators built up their largest bullish position in Comex futures and options in two years,
writes Atsuko Whitehouse at BullionVault.
Spot gold bullion prices traded $10 either side of the weekend's level of $2326 per Troy ounce, down from Friday's 3pm London benchmarking price of $2348, a
new month-end gold record against the US currency.
The 'safe haven' precious metal gained 1.8% across the month of May and has risen 13.8% year to date.
Prices for silver, which finds nearly 60% of its annual demand from industrial uses, recovered after briefly dipping below $30 per ounce during early trading.
This followed silver's 17.3% surge last month, showing a 31.4% gain so far this year.
"In precious metals, the spotlight has shone the strongest on silver this past month," says derivatives platform Saxo Bank's commodity strategist Ole Hansen, noting that silver's credentials as a semi-industrial metal
served silver well when both gold and copper extended their gains to new all-time highs in May.
"The biggest short-term risk to silver is a change in the technical and/or fundamental outlook which may trigger aggressive long liquidation from speculators."
Latest data show that hedge funds and other leveraged speculators in Comex silver futures and options grew their bullish betting on silver for a 3rd consecutive week in the 7 days ending last Tuesday, reaching the biggest since early March 2022, whilst they also trimmed their bearish bets as a group.
Overall, that pushed the net long position of Managed Money traders 4.8% higher from the previous week, back towards mid-May's 109-week record, while open interest in all Comex silver contracts edged lower but exceeded a quarter of a million for a 2nd week running.
The last time the size of open interest in silver derivatives exceeded this level was the end of February 2020, eve of silver prices plunging almost $6 per ounce from $18.33 during the first wave of the Covid crisis.
Speculators last week trimmed their net bullish betting on gold by 6.7% from the highest level since mid-April 2020, according to data published by US regulator the Commodities Futures Trading Commission (CFTC).
Platinum's net long position among Managed Money traders grew to a 1-year high, helping the price of the precious metal – which finds two-thirds of its demand from industrial uses, led by auto-catalysts – record an 11.6% gain across May, its 3rd consecutive monthly rise.
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Platinum bullion today slipped 0.9% to $1028 per Troy ounce as final results from Wednesday's elections in South Africa – the continent's most industrialized nation, the world's No.1 platinum miner, and now the 13th largest gold producer – confirmed that the African National Congress (ANC) has lost its majority for the first time in 30 years of full democracy.
The ANC received 40.2% of the 2024 vote, meaning it will have to strike an agreement with one or more smaller parties to form a governing coalition.
South Africa's Rand was slightly stronger on Monday after falling over 1% when early poll results showed the ANC was on course to lose its majority.
Exit polls in world No.2 gold consumer and fastest-growing major economy India meantime suggest that the Bharatiya Janata Party (BJP)-led alliance of Prime Minister Narendra Modi is to win a large majority in the 7-phase voting starting April and ending last weekend.
Gold prices in India today slipped below 71,300 Rupees per 10 grams, inclusive of the subcontinent's heavy tax and import duty costs, as the currency cut early gains on the FX market after hitting a 2-month high.
India's gold bullion imports surged to 47 tonnes in April, according to specialist consultancy
Metals Focus in their latest report, while dealers reported strong consumer demand during around 10th May's
festival of Akshaya Tritiya.
Gold prices on the Shanghai Gold Exchange today continued to show a strong premium to London – effectively the incentive offered to importers buying gold abroad and flying bullion into the precious metal's No.1 consumer nation China – increasing to $39 per Troy ounce on Monday against the previous historical average around $8 per ounce.
With gold prices in China slipping Monday near a 4-week low at ¥549 per gram – and down 4% from the all-time Yuan high recorded on 20 May – silver prices in Shanghai also continued to show a historical premium to London, rising to $4 per ounce last week, 13% above the international benchmark price with a multi-year high of ¥8445 per gram.
"People are taking a look at the drawdown in local silver inventories," said Daniel Ghali, senior commodity strategist at Canadian brokerage TD Securities Inc., commenting on the recent surge of demand in China.
"Silver is probably seen as cheaper relative to gold. That's
an attractive proposition for people who want to participate in the precious metals rally."
Gold prices in the UK Pound and the Euro today rose 0.3% to £1831 and €2150 per ounce respectively as those currencies strengthened against the US Dollar.
Both the Dollar index – a measure of the US currency's value versus its major peers – and the yield offered by benchmark US Treasury bonds edged lower on Monday as the odds of a September rate cut by the Federal Reserve rose to 56% on Monday from 49% a week ago according to trader positions
tracked by the CME derivatives exchange.
After a raft of 'hawkish' speeches and comments, Fed officials have now entered a blackout period ahead of the US central bank's policy meeting scheduled for 11-12 June.
The European Central Bank will announce its policy decision on Thursday, widely expected to see the ECB cut its benchmark interest rate from today's current historic high.
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