Senior Trader Update Friday 9th June
08 June 2017
Good morning everyone and Happy Friday!
Gold, silver and platinum slid lower in AUD terms before bargain hunting and shortcovering lifted them out of their lows while a ‘squeeze’ in palladium continued to drive the industrial metal higher.
Overnight the ECB left rates unchanged (main refinancing operations, marginal lending facility and deposit facility rates remain at 0.00%, 0.25% and -0.40% respectively) but a slight change in the statement’s wording from rates remaining at “present levels or lower,” to “The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases,” saw the Euro weaken against the Greenback which weighed on precious metals values, with the exception of palladium which has seen the forward curve move into heavy backwardation (1 month trading at -4% and the EFP blowing out to -$6.00).
The results of the UK election are slowly filtering through this morning in Asia and early exit polls have suggested a hung parliament. The GBP/USD has been crushed, falling from 1.2960 to 1.2709 in a straight line. Borrowing from Roman Emperor Marcus Aurelius, the only observation to be made about exit polls / pollsters is that “The opinions of 10,000 men are of no value if none of them know anything about the subject.”
Fomer FBI Director James Comey’s second day of testimony had no discernible impact on the markets.
Technically, XAU/AUD saw mean-reversion back towards the AUD 1690 (the 21 Day moving average) level that was flagged in yesterday’s commentary but as noted, no real technical damage has been inflicted on the bullish cause. The psychological ‘big figure’ at USD 1300.00/oz remains the summit of Mt Everest for gold bulls and needs to conquered for the November 8th 2016 highs at AUD 1760 and USD 1337.50 to be tested. For the moment XAU/USD is finding support at the previous major trendline resistance (currently USD 1272).
Good luck and have a great weekend.
Regards,
Andre
