Gold break resistance, tend to be up trend

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P.M. Kitco Metals Roundup: Comex Gold Ends Higher on Safe-Haven Buying; Bullish Near-Term Technical Momentum Building

From a technical perspective, August Comex gold futures bulls have the solid overall near-term and longer-term technical advantage, and gained some fresh upside near-term momentum Tuesday. There are no early technical clues to suggest a market top is close at hand. Prices are in a four-month-old uptrend on the daily bar chart.

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Speculators in precious metals futures liquidated long positions in the week through May 25, but it’s likely that those positions were re-established following a break in prices, market watchers said Tuesday.

The drop in futures positions, contrasted with the rise in exchange-traded funds, might suggest two different mindsets toward metals, a bank said a research note Tuesday.

According to the Commodity Futures Trading Commissions weekly commitment of traders data released Friday, speculators sold their bullish holdings across the board in precious metals, with platinum and palladium seeing the greatest drop as a percentage of its open interest.

In the disaggregated data, the managed-money crowd cut longs in gold, silver, platinum and palladium and added to shorts. Swap dealers cut shorts and added to longs in all but gold, where they exited both longs and shorts. Commercials cut shorts and added to longs in gold and platinum group metals, but exited all positions in silver.

“Last week we saw liquidation on ideas metals were overbought, so we saw fund profit-taking and that generated selling, along with some hedge fund redemptions,” said Sterling J Smith, a commodity trading adviser and market analyst at Country Hedging Inc., in Minneapolis, who follows the CFTC data closely.

Since the data is of May 25, Smith said funds have come in since then on price breaks, particularly toward the end of the week. “They’re also buying (Tuesday),” he said.

It’s possible, he said, that next week’s CFTC data will show that funds not only bought back what they sold, but added to positions.