Gold has dropped beneath the psychologically important $1,200 per troy ounce mark as the new week gets underway, finding itself under particular pressure from the significantly firmer US dollar. This is because the more pronounced rise in the US core inflation rate in April makes it more probable that the Fed will raise interest rates.
In euro terms, the rise in the gold price to above the €1,100 per troy ounce mark proved extremely short-lived, the price so far not able to defend this level, notes Commerzbank. Evidently some investors are taking profits, thereby playing their part in the gold price slide. As the CFTC’s statistics on the positioning of speculative financial investors show, the mid-month increase in the price of gold to above $1,230 per troy ounce was speculatively driven to a major extent and thus finds itself on a shaky footing.
In the week to 19 May, net long positions were increased by nearly three-fold to 78,600 contracts, putting them at their highest level in 12 weeks. The situation in which gold finds itself applies equally to silver: the price has slid below the $17 per troy ounce mark to a two-week low this morning. Here too, the previous price rise to nearly $18 was largely driven by speculation. Net long positions were likely increased almost three-fold – to 42,900 contracts, their highest level in ten months. Thus silver also faced correction potential. Net long positions in platinum were likewise expanded considerably, as was evidenced in a rising price, albeit a moderate one. Only in palladium did net long positions remain largely unchanged.
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