Senior Trader Daily Update 19 September 2017

Good morning everyone.
 
Precious metals have been on the slide since the air came out of the ‘safe-haven’ trade (i.e. geopolitics) with gold in particular, hitching its caboose to a strong (inverse) correlation to the USD/JPY. Throw into the mix, record US equity market highs and rising US Treasury yields and that just about covers the reasons for the corrective action seen across the precious metals markets.
 
Front and centre is this week’s US FOMC monetary policy announcement by the central bank at the conclusion of its two-day meeting on Wednesday. While the markets are not anticipating a move on interest rates by the Fed, investors will be looking for guidance from Federal Reserve officials regarding the scope and timing of any potential paring back of the its balance sheet.
 
The latest CFTC data (as at September 12th) showed;

• A meaningful increase in commitments from both sides of the gold non-commercial speculative community.

• Short covering in silver was matched by increased length from long non-commercial accounts.

• An equal increase in both long and short length in platinum

• Long liquidation in palladium

Technically, the move and close beneath the 21 Day moving average (and a 5 & 21 Day moving average crossover) in XAU/AUD yesterday means that it’s time to abandon the previously favoured stance of a push to the June 6th high at AUD 1728 for now. A retreat into the zone between the 55 & 200 Day moving averages (AUD 1618 – 1630) cannot be ruled out from present levels.
 
Similarly, XAU/USD has moved below its 21 Day moving average and broken the downside of a well-established uptrend channel which opens the potential for additional corrective price action all the way down to the 55 day moving average at USD 1280.
 
Good luck.
 
Regards,
Andre