Gold And Silver Surge On Open In Asia – Short Squeeze Likely

Today’s AM fix was USD 1,325.75, EUR 997.40 and GBP 856.59 per ounce.  
Friday’s AM fix was USD 1,305.50, EUR 975.49 and GBP 839.44 per ounce.


Cross Currency Table – (Bloomberg)

Gold rose $0.10 or 0.01% on Friday and closed at $1,312.60/oz. Silver rose $0.16 or 0.79% and closed at $20.46. Gold eked out a small gain for the week and was up 0.37%, while silver surged 3.23%.


Gold, 60 Days –  (Bloomberg)

Gold surged $20 or 1.5% on the open in Asia overnight prior to determined selling was seen to cap prices at the $1,335/oz level. Gold rose strongly through recent resistance at $1,320/oz and the next levels of resistance are at $1,340/oz and $1,350/oz. Support is at the recent low at $1,275/oz. 

Buying may have been encouraged as U.S. wholesale inventories fell unexpectedly for the second month coupled with data that holdings in the SPDR Gold ETF, the world’s largest gold backed fund, showed inflows of 1.8 tonnes, its first increase since June 10th.

Gold will also be supported by weaker-than-expected gross domestic product (GDP) data from Japan and from the very poor U.S. budget deficit data which is expected to rise to $96 billion in July.

Gold bears continue to ignore the very robust, long term demand from China. The China Gold Association released figures showing that consumption rose to 706.36 tonnes for the first half of the year compared to 832.18 tonnes in all of 2012. That is a 54% increase for the first half of the year.

With record short positions being held by hedge funds in the gold and silver markets the stage is now set for a significant short squeeze which should propel prices higher in the coming months. Autumn is the seasonally strong period for the precious metals due to robust physical demand and this should also contribute to a recovery in prices.


Support & Resistance Chart – (GoldCore)

Hedge funds have consistently been caught wrong footed at market bottoms for gold and silver in recent years and high short positions have been seen near market bottoms, and prior to rallies in gold and silver.

Conversely, the smart speculative money, bullion banks such as JP Morgan have reduced their short positions and are now long in quite a significant way and positioned to profit from higher prices in the coming weeks and months.

Prudent money, in the form of individuals, families, institutions and nations, continue to ‘bottom fish’ and accumulate physical bullion in order to protect against the still very significant macroeconomic, systemic, geopolitical and monetary risks of today.

NEWS
Gold climbs on weak U.S. data, increase in SPDR holdings – Reuters

Gold Advances to Highest Level This Month as SPDR Assets Expand – Bloomberg

Deceased man’s gold coins, bullion auctioned in Nevada – UPI

Hedge Funds Trim Gold Bets on Stimulus Speculation – Bloomberg

COMMENTARY
Bridgewater’sRay Dalio Warns Eurocrisis Is Not Over – Zero Hedge

Cornering the Gold Market – SilverSeek

Incredibly Important Developments In Gold & Silver Markets – King World News

Silver Short Squeeze – SilverSeek

For breaking news and commentary on financial markets and gold, follow us on Twitter.

 

Mark O'Byrne

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