Gold Silver Market Report 21 April 2017

Fundamentals and News^*

Downside Bund vs Depressed Upside Gold May Cover French Outcomes

Bund downside may increase with Melenchon unable to make further ground in French election polls, while depressed gold upside optionality could take care of tail risks, Bloomberg strategist Tanvir Sandhu writes.

Downside bund options may come into focus amid the coiling of risk with June 160.50 put equivalent to generic yield of about 40bp expiring May 26

Gold implieds trading at relatively low levels given depressed realized vols in both gold and U.S. real rates, even as geopolitical tensions in Syria and North Korea and risk of potential U.S. government shutdown remain; see chart here

Low entry point for OTM short-dated gold call options may offset downside costs on bunds in case of rise in political risks, with three-month 25-delta call at 14 vol, in the bottom quartile of 2year range

Cross vol gold spread with bunds may appeal given the low cost of optionality in gold and its attractiveness as a hedging tool against risk-off events relative to SPX

Conviction for outright bund shorts remains limited as French political risk stays fluid and with high number of undecided voters; extreme tail risk is that both Le Pen and Melenchon get through the first round o Implied probability of Le Pen victory based on betting odds is at the lows while the recent recovery of Fillon in the polls brings back the probability of Fillon vs Macron, which will see bund political risk premia collapse if realized

NOTE: Tanvir Sandhu is an interest-rate and derivatives strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

Franklin Gold and Precious Metals Fund added Asanko Gold Inc. to its investments and exited GResources Group Ltd. in the first quarter.

The fund, led by Fred Fromm and Stephen Land, boosted its investment in Alamos Gold Inc. and cut OceanaGold Corp., according to a quarterly update by the investment company analyzed by Bloomberg Global Data. Newcrest Mining Ltd. was the biggest holding, representing 5.3 percent of the fund.
(*source Bloomberg)

Data – Forthcoming Release

Technical Outlook and Commentary: Gold

Gold for Spot delivery was closed at $1281.90 an ounce; with gain of $1.69 or 0.13 percent at 1.00 a.m. Dubai time, from its previous close of $1280.21

Spot Gold technically seems having resistance levels at 1292 and 1297.1 respectively, while the supports are seen at $1275.8 and 1270.8 respectively.

Technical Outlook and Commentary: Silver

Silver for Spot delivery was closed at $18.03 an ounce; with a loss of 0.11 cent or -0.61 percent at 1.00 a.m. Dubai time, from its previous close of $18.14

The Fibonacci levels on chart are showing resistance at $18.48 and $18.67 while the supports are seen at $17.89 and $ 17.70 respectively.

 

Resistance and Support Levels

Indications only, open & closing prices are bids; data source: Bloomberg; important disclaimer below; Times as per Dubai

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