Near-term, the risk of further long liquidation looms as the institutional investor remains lukewarm with flows into Exchange Traded Products not picking up while the increase in net-long futures positions has so far primarily been driven by short-covering.
COPENHAGEN : Gold remains stuck in a key support/resistance range of 1,350-1,417 USD/oz followed by the August high at 1,434 USD/oz. Near-term, the risk of further long liquidation looms as the institutional investor remains lukewarm with flows into Exchange Traded Products not picking up while the increase in net-long futures positions has so far primarily been driven by short-covering, according to Ole S Hansen, Head of Commodity Strategy at Saxo Bank.
"We will be keeping a close eye on bond yields which have rallied strongly during the quarter with any signs of this move being overdone potentially putting some support back into gold. Until September 18, many investors will be inclined to hold back on new investment decisions as they await clarity on what intentions the Fed may have with regard to tapering."
Silver, which has seen a dramatic recovery during August, ran into trouble early in the week when some of the previous strong support from Copper faded but having managed to hold onto support at 23 USD/oz it quickly resumed its outperformance against gold and it is currently the best performing metal, also versus platinum and palladium.
The dollar reached a seven-week high and US ten-year government yields came to within a whisker of three percent which in the process put further downward pressure on emerging market currencies and their respective economies. As a result of these and with no additional escalation in the Middle East crisis, commodities ended with a small weekly loss, the first in four weeks.
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