All in all, a disappointing week as the precious metals markets have been stuck in relatively narrow ranges.
Developments in Spain and the first round of the French election have been at the forefront of the business news. The Spanish 10 year bond auction went well, with a yield of 5.74 per cent and the issue was 2.4 times oversubscribed. The Spanish bond levels will be closely monitored by the investment community as worries continue about the sustainability of the Spanish debt situation. There have been comments from the French president Sarkozy, about widening the mandate of the ECB to include growth, but it has to be seen if this is still on the agenda after the French election has been decided.
Gold: US $ 1642.00 – down US $ 16 from last week. The Commitment of Traders Report (COTR) showed that further reductions of long and short positions have taken place. Gold traded in quite aggressively to the downside as well as to the upside last week, but always came back towards the US $ 1640 level. Spot gold traders must have had a very difficult time in this see-saw market and option volatilities have also gone down significantly. The gold option volatilities are on their lowest level since we started our weekly report (March 2011) and it seems that there is simply no real new interest in gold at the moment.
Physical trading is very slow and the uptake in India for Akshaya Tritiya has also been disappointing. ENBD customer base continues to buy physical gold, but this has also slowed down.
Option volatilities midrates : Gold atm (at the money)
1 month 14.50 % down 2.50 %
3 month 16.25 % down 1.75 %
6 month 18.50 % down 1.00 %
1 year 20.00 % down 1.00 %
Premium 1kg Gold bars loco Dubai (DGD 995 fine) against loco London: US $ 0.50
EFP Spot Gold to June Comex: US $ 0.65
ETF: Holdings are at 2515 tons
Support : 1611 and 1588 Resistance: 1660 and 1700
Silver: US $ 31.65 – up US $ 0.15 from last week. Silver took its lead
mostly from gold last week, and that means that the interest in silver has waned as well. Silver long positions as well as silver short positions have been reduced, according to the Commitment of Traders Report (COTR). This could be viewed as an indicator that the investment community is not interested in silver as an asset class at the moment. This is also reflected in the weaker silver option volatilities. There could
be more position closures ahead as the switch into July Comex might look less attractive compared to closing out existing positions and going into wait-and-see mode.
Option volatilities midrates : Silver atm (at the money)
1 month 29.00 % down 2.00 %
3 month 30.50 % down 1.50 %
6 month 31.50 % down 1.00 %
1 year 32.50 % down 0.50 %
EFP Spot Silver to May Comex: US $ minus 3.00 cent
ETF: Holdings are at 15065 tons
Support: 31.00 and 30.40 Resistance: 33.00 and 33.52
Platinum: US $ 1575 – down US $ 7 from last week. The discount to Gold has been slightly reduced to US $ 65, but platinum looks much more vulnerable than palladium at the moment. A bullish signal could be that, according to the Commitment of Traders Report (COTR), long positions have been reduced and new short positions have been added. This should provide some underlying support for a potential short covering rally.
Option volatilities midrates : Platinum atm (at the money)
1 month 17.50 % unchanged
3 month 20.50 % unchanged
6 month 22.00 % unchanged
1 year 24.00 % unchanged
EFP Spot Platinum loco Zurich to July NYMEX: US $ 1.65
ETF: Holdings are at 47 tons.
Support: 1560 and 1540 Resistance : 1600 and 1625
