wealth.goldmoney.com / BY ALASDAIR MACLEOD / FEBRUARY 17, 2017
The Trump administration is running into choppy waters, commodity prices are on the up, and inflation is around the corner.
After a slow start, gold and silver resumed their uptrends this week, with both metals edging into new high ground. Gold rose slightly from $1233.5 at last Friday’s close to $1237, and silver from $17.95 to $18.03 in early European trade this morning. It has been the pattern for the last month that instead of drifting lower over the course of Fridays, precious metal prices have rallied in US trading hours, so this week’s uptrend may have further to go before the week is out.
The performance of both metals has a good feel about it. From the pre-Christmas lows, gold is now up 10% and silver by 14.8% so far. Physical demand continues to feed ETFs, and gold’s open interest on Comex is noticeably lagging the price. This is illustrated in the next chart.
While there has been a small pick-up in open interest, the gap opened by the price is remarkable (arrowed). This tells us that futures buying, as opposed to bear closing, has yet to occur, and the hedge funds are missing the boat, presumably still being long of the dollar. Silver is a different story. Here, open interest has marched in step with the price, as shown in the next chart.