Gold Silver Market Report 22 May 2017

Fundamentals and News^*

Wild Commodity Markets Hurt Gold Bears While Crop Bets Pay Off

The turbulence that’s rocked commodity markets caused headaches for gold investors, while funds betting on crops were able to get ahead of price declines.

A measure of historical volatility rebounded for the Bloomberg Commodity Index, which tracks returns for 22 components. Turmoil has reigned across raw materials as Brazil’s latest political crisis sparked steep declines for the real, raising prospects of increased farm exports. At the same time, deepening controversy over U.S. President Donald Trump’s connections with Russia sent investors hunting for haven assets, giving a surprise boost to gold.  Hedge funds were well-positioned for the drop in agriculture, getting more bearish on soybeans and coffee. Still, the money managers miscalculated ongold.

Here’s a closer look at some of the biggest moves for commodity holdings:

Soybean Payoff
July soybean futures fell to a one-month low on May 18 as another political scandal in Brazil spurred the real’s biggest slide since 1999. The currency drop sparked the nation’s farmers to sell the oilseed at a “once in a decade” pace, according to Vitor Minella, who works in Mato Grosso state at Meneguetti, a brokerage. A weaker real prompts growers to offer more crops that are priced in dollars globally.

Hedge funds were able to anticipate the price losses. As of May 16, money managers held a soybean net-short position, or the difference between bets on a price decline and wagers on a rise, of 36,523 futures and options, according to U.S. Commodity Futures Trading Commission data released three days later. That compares with 34,335 a week earlier.

Gold Wagers
The metal posted its best week in more than a month on Friday as political turmoil in the U.S. and Brazil spurred gyrations in stocks and currencies. Unfortunately for money managers, they lowered their bullion net-long positionby 30 percent, meaning that some of them missed out on the rally. The holdings fell to 69,923 contracts, an eight-week low, the CFTC data shows.
(*source Bloomberg)
 

Data – Forthcoming Release

Technical Outlook and Commentary: Gold

Gold for Spot delivery was closed at $1255.93 an ounce; with little gain of $8.87 or 0.71 percent at 1.00 a.m. Dubai time closing, from its previous close of $1247.07

Spot Gold technically seems having resistance levels at 1263.9 and 1272.9 respectively, while the supports are seen at $1234.80 and 1225.8 respectively.

Technical Outlook and Commentary: Silver

Silver for Spot delivery was closed at $16.87 with gain of $0.29 or 1.72 percent at 1.00 a.m. Dubai time closing, from its previous close of $16.58

The Fibonacci levels on chart are showing resistance at $17.02 and $17.16 while the supports are seen at $16.54 and $ 16.39 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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