Gold And Silver Price: Expect Volatility Later This Week

In this article, we summarize which events in the week ahead could impact the gold price and silver price. At the bottom of the article we explain that these events are generaly no fundamental drivers, but mostly the result of trading in COMEX futures.

Precious metals are basically going nowhere, for more than two months now. Last week, gold remained within a trading range between $1170 and $1215 while silver did not exceed its $15.80 to $16.80 trading range.

The weekly Commitment of Traders (COT) report which shows the positions of key market participants in the gold and silver futures market (COMEX) is reflecting the directionless character of the gold and silver price. As seen on the next chart, the latest COT report shows a stagnation of long and short positions by commercial and non-commercial traders. Our view is that the rate of change of short positions of commercial traders (blue bars on the chart) determine the stopping power of each rally (red lines next to the blue bars).

gold_cot_1_May_2015

For the week commencing May 4th, there are a limited number economic data but they are typically moving markets and metals. On Friday, the U.S. monthly unemployment figures will be released, as seen on the table below. Moreover, Janet Yellen will be speaking on Wednesday. Both events have the potential to create volatility in stocks, bonds and precious metals.

The trend lately is that economic data turn out to be worse than expected. Until recently, the market reaction mostly favored stocks while metals fell mostly victim. In the last couple of weeks, “bad news is again bad news” and stocks are mostly suffering when worse than expected economic data are released. That is a trend changer, and investors should pay attention to this.

gold_price_drivers_week_4_May_2015

Note: The primary focus of our website is to report on the different aspects of the gold market: fundamentals, economic and monetary analysis, basic technical analysis. Our view on the real price setting in the gold and silver market differs from the mainstream view. Price changes “happen to coincide” with events, and mainstream media got used to report some sort of relationship between the two. However, we believe that the real price setting is taking place in the COMEX futures market. Market expert Ted Butler does an outstanding job analyzing the weekly evolution in the COMEX market and how it affects price setting

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