Gold, Silver Knee Jerked Lower, COT Data Delayed, Gone Fishing

HOUSTON – Gold and silver took it on the chin following the U.S. Non-farm Payroll release Friday, July 06, 2012.  Apparently the skeleton crews manning trade desks on the last day of the Independence Day week (at the same time that European vacation season is getting underway), were of a mood to raise liquidity. 

 
Interestingly the Euro/USD exchange rate turned into a nasty knee jerk downside driver for gold following lower interest rates in the E.U., additional Bank of England Q.E. and the disappointing U.S. Non-farm Payroll report. 

Hourly charts courtesy of Finviz.com 

Traders we correspond with were exchanging emails with numerous question marks as the rather violent late holiday week moves seemed counter-intuitive in many cases.   

Continued…

The rapid rise in the U.S. dollar index (DXY)  Thursday and Friday likely reflects funds moving out of other currencies and assets and into perceived “safety” ahead of the weekend, but if our read is right, the potency of the moves today had more to do with a lack of liquidity than a sustainable change in the gold and silver markets.  Indeed, most of the data crossing on the weekly event calendar seemed more supportive of gold and silver than the opposite. 

A common view among traders is that the odds for more monetary stimuli (read more money printing) to be announced by central banks and policymakers are higher, not lower after this week. 

With a U.S. election looming in four months, some expect the Fed to announce some form of quantitative easing by the Jackson Hole gathering of the high priests of central banking, scheduled for late August. (Read an interesting history of the Jackson Hole meetings at this link, courtesy of the Kansas City Fed.)

Thin Market Conditions and Holidays   

When U.S. Independence Day falls in the middle of the week, some traders end up taking off Thursday and Friday (if not the whole week) in order to get a “five day” weekend.  That leaves the markets in thinner trading conditions and subject to higher volatility.   As we said in a memo to staff this morning, “be sure and take the trading today with a healthy dose of trading salt.” 

In the mean time, we had to note that while the USD was up big, gold priced in greenbacks moved about  1.6% lower, with gold in Euros falling roughly 1.3%, while the Gold Bugs Index or HUI “outperformed” to the downside, off 3.3%.

 

HUI daily, with gold in orange. 
 
We can still point to overall outperformance of the Big Miners since mid-May, however, which is a positive sign for those long the miners as long as it lasts.

 
COT Data Delayed 

The folks at the Commodity Futures Trading Commission (CFTC) take all holidays they can and they don’t pass on opportunities to delay a release of the data they usually publish late in the afternoon on Fridays, when the data are already three days old.   Since Wednesday was a Federal Holiday, we won’t get to update our commitments of traders (COT) data until the afternoon on Monday, July 9, when it will then be six days old. 

We still complain from time to time that in this day and age we ought to be able to see the data in more or less real time, or at the very least perhaps a day after the fact, but so far those complaints have not been fruitful. 

By the way, for those who may have missed it, we shared with our general readership a GGR video covering the June 29 COT release, with a focus on the positioning of the largest traders of silver futures.  To view that video just follow the link below. 

http://www.gotgoldreport.com/2012/07/comex-silver-futures-skewed-short-potentially-explosive.html

Gone Fishing

At any rate, with the COT data delayed until Monday afternoon, and a schedule conflict of ours on Monday (traveling part of the day), we have decided to take this opportunity to catch up on some important ‘personal development’ this weekend – as long as the fish are biting! 

Consequently, our usual updates to the Disaggregated COT report and the weekly closing table will be postponed to next week.  However, as of this moment it is our intention to at least partially update our technical charts for subscribers by the usual time on Sunday (18:00 ET), but we reserve the right to take an extra day or two, working on our ‘personal development project.’  (If the fish are being uncommonly cooperative.) 

Have a good weekend everyone, and we’d advise that folks take the action in the commodities pits today with a healthy dose of trading salt.