Explore Special Offers & White Papers from AFS

More Liquidation of Gold & Silver ETFs


The capitulation in gold and silver extended overnight with what we think is mostly stop loss selling from the massive net long built up from the $425 gold rally off the February low and the $7.50 rally in July silver. However, ongoing liquidation of flight to quality longs from lower ME angst is certainly adding to the washout while typical outside market influences of the dollar and treasury yields have not been a noted influence and are unlikely to be a key impact today. In retrospect, there was apparently more flight to quality longs in off the potential for a widespread Middle East war than expected and that should be remembered if conflict returns. The breath of selling is broad with gold mining shares pressed into two week lows yesterday and ongoing liquidation of gold and silver ETF holdings. In what is more of a psychological negative than a material physical negative, the Vietnam central bank only managed to sell a 1/5th of the gold at an auction overnight. From a short-term technical perspective, the June gold contract likely retains additional stop loss selling with the gold net spec and fund long position into Monday’s high likely at the highest level since April 2022.

gold bars and silver coins


While the liquidation in precious metals is probably not linked to the reversal in copper today, copper has a similar overbought condition as gold and silver with disappointing global manufacturing PMI readings adding an element of selling interest this morning. While not a primary factor in the reversal, Anglo-American indicated their first quarter 2024 copper production was up 11% and they left their forecast of output for the entire year at 730,000 – 790,000 tons. After making another higher high for the move yesterday, gains in copper for the month of April increased to $0.52, which leaves the market vulnerable to aggressive stop loss selling. While the copper market might see the freefall extend sharply, it should be noted the copper market managed the aggressive April rally in the face of generally disappointing Chinese economic signals and that could eventually help the market find value around the $4.30 level. Certainly, the decision to reduce Chinese smelter capacity disrupted the refined copper market which remains the sector of the copper trade expected to be the tightest this year.


Interested in more futures markets?  Explore our Market Dashboards here.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

Latest News & Market Commentary

Explore Special Offers & White Papers from Archer Financial Services

Get Started

Contact Us Today