Gold and silver prices remain positive despite weak ETP and futures markets

Rhona OConnell - Head of EMEA and Asia Market Analysis at StoneX commented that although some preliminary tariff agreements have helped ease pressure on the stock market and other risky assets, and precious metals ETFs and futures markets are quite quiet, gold and silver still have key drivers and are well supported in price.

In the latest report released on Wednesday, O'Connell said that although gold prices showed signs of recovery in last week's fluctuations, they were generally "stuck" in the 3,200 - 3,450 USD/ounce range since April 23, and within a narrower range of 3,300 - 3,400 USD/ounce since the end of June.

Previously, the failure of $3,440/ounce on July 22 and 23, combined with the seeming cooling of trade tensions, caused prices to gradually decrease until the non-farm payrolls data was released last Friday.

physical markets are almost sluggish due to economic instability and crop factors. There are almost no signs of hunting for cheap goods, and the supply of recyclables near the market is also slowing down, she said.

Post-season and holiday season prospects in India

O'Connell said the rainy season in India has begun and is off to a good start. With about 60% of the population dependent on agriculture and farmers often choose gold as their main investment channel, this could boost demand for gold after the crop (September), right before the holiday season, she said.

She also said that silver will fall more strongly than gold due to economic concerns and supply from the solar energy industry.

Ms. O'Connell said that in the period from July 23 to 30, gold prices fell from $3,439 to $3,268 (equivalent to 2%), while silver fell more strongly from $29.5 to $26.2/ounce - losing 8.4%, surpassing the usual correlation between the two metals.

The reason is due to concerns about the economy and the surplus supply in the solar energy market. However, prices have recovered to 37.3 USD, reaching 38% according to Fibonacci.

However, she still maintains the same outlook for both gold and silver. In the long term, silver has a solid foundation, but is currently stable above the $36 mark with the current Fibonacci resistance level dropping to $18.77. Gold has somewhat reduced its price including political and economic risks, but the macro environment is still supportive. Although the support level of $3,295 was temporarily violated last week, there is still a strong support zone in the range of $3,200 - $3,280/ounce" - she said.

ETF: Gold stagnates, silver increases but may be taking profits

Regarding capital flows into exchange-traded products (ETP), she said: For gold, capital flows are almost flat. As for silver, although it is still on the uptrend, it is likely to be profitable.

The latest data from the World Gold Council (WGC) as of July 28 shows that the number of newly created ETPs in gold is slowing down, mainly due to declining buying power, not strong selling. As of the end of June, the net purchase volume was 994 tons, but only 24 tons were added in the following 4 weeks, reaching a total of 3,639 tons".

The futures contract market weakens

In the futures market, Ms. O'Connell said that the sentiment towards gold is reversing in a negative direction, while silver has recorded a narrowing position in both buying and selling.

In the first three weeks of July, COMEX Managed Moneys buying position for gold increased from 514 tons to 606 tons, but decreased to 532 tons in the last week when the increase slowed down. The selling position increased slightly from 108 tons to 114 tons".

For silver, the buying position also decreased from 9,692 tons to 9,285 tons. At the same time, there was an activity of closing the selling position, down from 2,348 tons to 2,292 tons.