|Day's Range||1,740.40 - 1,758.60|
Commodities trading was mixed during the final week of May. A month that turned out to be the come-back month for many markets following the Covid-19 related collapse seen during Q1.
Watch trader reaction to $1744.10 to $1754.30 early next week. This should tell us if buyers have returned or if sellers are taking control.
The direction of the next major move in crude oil will be determined by trader reaction to the retracement zone at $36.07 to $40.50.
(Bloomberg) -- The scramble to jump on one of the hottest gold trades in years -- by shipping bullion to New York -- has sparked what may be one of the largest ever physical transfers of the metal.“The flows into New York are unprecedented,” said Allan Finn, global commodities director at logistics and security provider Malca-Amit. His company’s teams in New York have been working 24 hours a day to cope with demand while navigating lockdowns, flight disruptions and social distancing.Gold flooded into the U.S. in recent months as traders rushed to profit from an arbitrage caused by dislocations in the market triggered by the pandemic. Since late March, some 550 tons of gold -- worth $30 billion at today’s price and roughly equal to global mine output in the period -- have been added to Comex warehouse stockpiles. Hundreds of tons of that was imported.While tens of billions of dollars of gold change hands every day in financial markets, a much smaller amount tends to physically move between vaults in trading hubs like London, Zurich and New York.But that started to change as the Covid-19 crisis affected the supply chain. When planes were grounded and Swiss refineries closed in late March, traders were worried they wouldn’t be able to get gold to New York in time to deliver against futures contracts. That caused futures, which typically trade in lockstep with the London spot price, to soar to a premium of as much as $70 an ounce.That created an opportunity for enterprising traders: buy gold somewhere in the world at the spot price, sell futures, and benefit from the difference by shipping the metal to New York.The scale of the trade has been revealed in exchange reports, import and export data and comments from some of the leading precious metals shipping and vaulting companies. On Thursday, traders declared their intent to deliver 2.8 million ounces of gold against the June Comex contract, the largest daily delivery notice in bourse data going back to 1994.Swiss gold exports to the U.S. have surged, reaching 111.7 tons in April, the highest on record. American import data for April isn’t yet available, but already in March gold imports topped $3 billion, according to the Census Bureau, the highest in at least a decade. Refineries as far away as Australia have ramped up output of kilobars -- the form typically delivered on the Comex -- to ship to New York.For Brink’s Ltd. Managing Director Mark Woolley, the spike in demand to ship gold to New York has been unlike anything he’s seen in 20 years in the market.“The amount of metal that we’ve successfully moved into New York is pretty significant,” he said Thursday on a webinar hosted by the London Bullion Market Association. “It’s probably not far off the total amount of metal that’s been mined in this period.”CME Group Inc., which owns Comex, responded to the recent market dislocation by introducing a new contract allowing the delivery of 400-ounce bars, the type traded in London. Still, “other changes need to be at least considered,” according to LBMA Chairman Paul Fisher.The enormous movement of gold has been a boon for logistics companies, but also a challenge. Not only have passenger flights -- on which shipments are typically transported -- been grounded, but New York City, where many Comex warehouses are located, has also been a hotspot for the virus.To deal with flows, Loomis International U.K. opened up additional vault capacity. Malca-Amit considered using airports in Boston and Philadelphia, but hasn’t needed to yet, Finn said.While large volumes and virus-related restrictions at vaults and airports caused some delivery delays, much of the spike in the premium for futures contracts in March -- which left some banks nursing sizable losses -- was driven by perception rather than reality, Finn said.“My own personal opinion is that any assessment on the inability to get gold in was ill-informed at the time and was made on assumptions rather than fact,” he said.Still, the bonanza for precious metals shippers may last a while. Large deliveries have seen June Comex futures drop to a discount to spot prices this week, but later dated futures are still at a premium. And as investor interest in other precious metals picked up, futures for silver and platinum have also traded at premiums to spot.“The guys in New York have done a great job,” said Brian Hayward, head of Loomis International U.K. “We’re seeing a lot of silver head that way right now.”(An earlier version corrected the Y axis in the first chart)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
It’s a busy week ahead. Central banks are in action and China will be in a retaliatory mood. Then there are the stats to begin tracking once more…
Stocks across Asia and Europe took a dip Friday and so did bitcoin in anticipation of Trump’s comments on “deeply troubling situations” in Hong Kong.
The direction of the June E-mini Dow futures contract into the close on Friday is likely to be determined by trader reaction to 25144 and 24935.
The new minor range is 2903.75 to 3065.50. Its 50% level at 2984.50 is controlling the direction of the index on Friday.
The direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the main 50% level at 1.1066.
Silver markets initially pulled back during the week but then turned around to show signs of strength again in order to break above the $18 level.
The S&P; 500 rallied towards the 3000 level during the week, but as you can see have given up quite a bit of the gains.
Crude oil markets have gone back and forth during the week, showing signs of noisy trading. The gap above is certainly in focus in both grades that I follow.
Natural gas initially tried to reach above the $2.00 level but then rolled over about $0.25 by the time we got done.
Gold markets initially fell during the week, but then turned around to form a bit of a hammer.
Longer-term, we believe metals could continue to rally for quite a while, yet we understand skilled technical traders want to time entries to limit risks.
Silver markets rallied significantly during the trading session on Friday, as we continue to see a lot of noise in general.
Crude oil markets initially dipped on Friday but then turned around to show signs of strength again.
At this point, the market looks as if it is ready to go back into the previous gap, where there should be plenty of buyers.
Gold markets have shot higher during the trading session on Friday, breaking above the top of the shooting star from the previous session.
The British pound has rallied a bit during the week, breaking above the ¥132 level. The market is likely to see noise above, perhaps extending to the ¥135 level.
The Euro exploded to the upside during the week, breaking above the 1.11 level. However, we are reaching some significant resistance just above.
The pressure from the increase in oil inventories is offset by reports that Saudi Arabia wants to extend current production cuts until the end of the year.