by Alasdair MacLeod
Gold and silver followed different paths this week, with gold rising $53 from last Friday’s close to trade at $1735 in morning trade in Europe. Meanwhile, silver fell slightly on balance by 2 cents to trade at $17.65.
This divergence can be laid at Comex’s door. The gold contract is struggling with the bullion banks trying to reduce their short positions without driving the price higher. Last week’s fall to the low $1670s was no more than an attempt to shake out some stop-losses against an improving background for the stock market. The lower levels obviously found buyers, which took gold back to the top of its recent trading range ($1744) yesterday.
Meanwhile, in silver the swaps as a group are slightly short, and patiently working towards going long. In their favour the July contract is winding down, but despite having to pay between 15–20 cents premium to roll into September, buyers are not only paying it, but open interest is ticking higher. This is shown in our next chart.