Weekly round-up for Stonex Bullion

Gold COMEX Managed Money shorts at their lowest since the end-January price peak; bear signal?

Warsh sworn in, Trump resumes pressure for a rate cut, NonFarm points the other way (or does it?),

ECB reports gold as largest Official Sector reserve asset at end-2025

The Royal Tudor Beasts; Royal Dragon 2026

StoneX Bullion GmbH

Down across the board but not necessarily a full breakdown. Headline US employment numbers point to higher rates (but see below for notes of caution) while the ECB gears up for a rate rise in this week’s meeting. A report from the ECB points gold as the largest reserve asset in the official sector following the massive price rise last year; this of course can go either way in future but has become a talking point about Treasuries.

Gold, now below all three key moving averages

We have been saying for some weeks that it is axiomatic that extended periods of very narrow range trading do tend to lead to a build-up of pressure and generate a breakout in one direction or the other. The fall across the board in the markets at the end of last week can’t necessarily be called a break-out, but we did at least see some life in the markets as increased geopolitical tensions coupled with much stronger Nonfarm payrolls in the US, announced on Friday, burst a few bubbles, with all four precious metals sliding on rising expectations of at least one rate hike in the States this year. As widely expected, Kevin Warsh will have his diplomatic work cut out with the president seemingly reversing course from his independence comments at Mr. Warsh’s swearing-in ceremony, and calling over this past weekend for a rate cut; but the external parameters point, if anything, in the opposite direction and the bond market is reacting accordingly. That said, these markets are now oversold and the background outlook will depend to some event on whether there is follow-through selling in Asia or whether some bargain hunting starts to appear. Gold is trading below $4,330 and silver below $68. Gold’s key moving averages range from $4,428 (200D) to $4,614 (50D). Silver’s key averages are between $68.4 (200D) and $77.08 (20D). On an RSI basis, both are oversold, silver more so than gold. Gold and silver are both at their lowest since 23rd March. In the professional markets the gold and silver ETFs have remained friendless with continued attrition. The COMEX activity to the week ended Tuesday 26th saw a cautiously bullish move in sentiment (but no such move in the price) with outright longs rising 16t (4%) to 492t and shorts contracting by 30t or 36% to just 54t, the lowest outright short since end-January, when prices peaked; and compared with a 12-month average of 97t. If anything this is a potential bear signal. Over the same period silver crawled from $73 to $76 (before retreating); this was accompanied by a similar pattern to gold but in smaller scope, with a 2.3% gain in outright longs and a 0.2% contraction in shorts; the silver shorts stand at 1,027t, compared with a 12-month average of 1,749t. 

Gold and the 2Y, 10Y yields: correlation with 10Y, 0.78; with 2Y, 0.77

Meanwhile the President is now calling for a need for a rate cut despite the evidence to the contrary. The Nonfarm Payrolls, at first glance, point in the other direction but Pantheon Macroeconomics makes the following salient points (among others): - the 172k jump in May was well above consensus forecast, which is ascribed largely to “an erratic jump in local government payrolls”, with private payrolls rising by 120k, leaving the three-month average gain at 166k, the highest since June 2023. Pantheon believes that this momentum is unsustainable because, inter alia

a) The numbers are at odds with the household survey, which reports falling employment over the past three months;

b) Typically, weaker businesses take longer to respond to these surveys than the more successful, resulting in downward revisions.

c) Consumers’ spending has been bolstered by tax rebates, which are now fading

So the jury remains out on the competing forces with respect to rate changes n the US; we would argue that a Q4 hike may yet be the most likely outcome as the legacy from the Hormuz issue will last some months, no matter when the Strait is opened again.

Outlook The outlook for the gold price remains largely contingent on developments in the Middle East and although some progress has been made, the key issues remain unresolved. Our belief in a downward bias is, so far, being vindicated but we are keeping our eyes open for any bargain hunting. Given the circumstances, this may remain in abeyance and we suspect that Middle East apart, the next FOMC meeting will be a fresh focus of attention. Given the industrial fallout from the current circumstances we should expect silver to underperform.

Gold COMEX positioning, Money Managers (t)

COMEX Managed Money Silver Positioning (t)

The S&P, gold and copper; S&P/gold rising at 0.556 while S&P/Cu is 0.54