Gold News

Gold and Silver Prices Slip as GLD Expands But Comex Specs Retreat

GOLD PRICES edged lower on Monday, even as the US Dollar slid to a new two-month low, after Comex speculators again cut their net bullish positions despite an inflation reading that came in below estimate, boosting expectations that the US Federal Reserve will start cutting interest rates sooner than later, writes Atsuko Whitehouse at BullionVault.
Gold prices in the US Dollar fell 0.6% to $1965 per Troy ounce after rising more than 2% last week, the biggest gain in 4 weeks.  
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Gold prices in China, the metal's No.1 consumer also dropped Monday, falling 0.9% overnight to a one-month low at ¥467 per gram on the Shanghai Gold Exchange.
With the Chinese central bank apparently continuing to limit the issue of new import licenses, that held the SGE premium to London prices at $46 per ounce, contrasting with the 5-year average incentive for new imports of $9 when 2020, the year of strict Covid lockdowns, is excluded. 
Gold import demand in India, the No.2 bullion consumer nation, surged 60% in October from a year earlier to reach a 31-month high in October as jewellers ramped up purchases ahead of the Diwali festival, a government source said Monday.
"[But] apart from central bank gold buying, which continues at a record pace, leveraged fund accounts – such as hedge funds and CTAs [commodity trading advisors] – as well as investor demand for ETFs, remain key in underpinning a continued rally in gold," says derivatives platform Saxo Bank's commodity strategist Ole Hansen.
Chart of Managed Money's net bullish position in US Comex gold futures and options contracts. Source: BullionVault
Despite last week's rise in gold prices following that softer-than-expected US inflation data, hedge funds and other leveraged speculators in Comex gold futures and options cut their bullish bets as a group while increasing their bearish positions.
For the week-ending last Tuesday, that move extended to 12% the decrease from end-October's peak in the net long position of Managed Money traders triggered by the Hamas attack on Israel and the ongoing Israeli invasion of Gaza in response.
Longer term, their net bullish position on gold remains 6% above its 2023 average but 21% lower compared to the five-year average. 
For silver, the latest speculative positioning data from US regulator the CFTC says the net long position in Comex futures and options – despite reaching the highest level since early September last week – was still 11% below the 2023 average and 66% lower than the five-year average.
Finding nearly 60% of its annual demand from industrial uses, the price of silver fell nearly 1% on Monday to $23.49 per ounce after surging 6.6% last week.
iShares' giant silver ETF trust (NYSEArca: SLV) continued to shrink last week, with shareholders liquidating 1.1% of the fund so far in November.
Among gold-backed ETF investment trusts, the giant GLD experienced its largest one-day inflow in 4 weeks last Friday, increasing by 13 tonnes to reach the biggest size in over two months and growing by nearly 20 tonnes so far in November.
In contrast, the second-biggest gold ETF, the IAU, continued to liquidate, reaching its lowest level since early April 2020, having shrunk by 4.3 tonnes this month.
Global gold-backed ETF outflows worldwide continued for the fifth consecutive month in October but slowed their pace to 36.6 tonnes after reaching a one-year high of 58.7 tonnes in September.
Ten-year US Treasury yields – a benchmark rate for government as well as many finance and commercial borrowing costs – meanwhile edged higher by 4 basis points today after briefly touching the lowest level since September beneath 4.38% on Friday.
Betting on "no rise" to overnight interest rates at the Fed's December and January meetings has now reached nearly 100% among interest-rate speculators, according to the CME derivative exchange's FedWatch tool
Tuesday will bring the release of minutes from the Federal Reserve's "no change" November policy meeting. Investors will also, ahead of the Thanksgiving holiday at the end of this week, be watching Monday's Treasury auction of $16 billion in new 20-year debt after an auction of 30-year bonds on 9 November drew a much higher-than-expected yield, indicating weak demand, although a ransomware attack on the US division of China's largest bank may have spooked the market.
The US Dollar index – a measure of the US currency's value versus its major peers – meanwhile extended its losses on Monday to touch a fresh August low.
The greenback dropped 2% last week, the biggest one-week decline since July, amid rising expectations that US rates have peaked following the softer inflation data.
European stocks were subdued on Monday as the pan-European Stoxx 600 traded flat after jumping nearly 3% last week, while Italian bank shares gained after Moody's upgraded its outlook for the country's sovereign debt.
Asian stock markets earlier were livelier as Japanese shares hit 33-year highs, as Nikkei 225 rose to its highest level since March 1990 before paring its gain.  The Nikkei still has risen nearly 9% so far in November, the biggest monthly gain since November 2020.
Gold priced in the UK Pound and in the Euro meantime fell 0.6% to £1581 and €1804 per ounce as both currencies steadied against the US Dollar after gaining around 2% last week to the highest since mid-September.
India's wholesale bullion discount to London prices was reduced to $3 per ounce last week – inclusive of the country's 15% import and 3% sales levies – from the previous week's $4, despite local gold prices rising within 2.5% of this spring's all-time highs above 63,500 Rupees per 10 grams.

Atsuko Whitehouse is the Head of the Japanese Market at BullionVault and the Editor of Japanese GoldNews.

See all articles by Atsuko Whitehouse here.

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