Gold at New Record Nominal High; Comex Open Interest Below Recorded Levels

Includes: GLD, SLV
by: GoldCore

Gold: Gold has surged to new record nominal highs above $1.064/oz in trading in Europe this morning. With the US holiday yesterday gold traded in a $10 range on Monday. In euro and GBP terms, gold is trading at €719/oz and £675.86/oz respectively.

Concerns regarding the dollar and rising oil prices seem to be the impetus for gold’s new record highs today. While the large COMEX positions may suggest a correction is likely, it is important to note that open interest levels remain well below the record 593,953 contracts seen in mid January 2008 (the gold open interest on the COMEX rose 2326 contracts to 502,513 yesterday). Indeed such open interest figures were seen for much of the final quarter of 2007 and the first half of 2008 (as seen in the excellent chart featured in Le Metropole Café last night).

Also, it is important to note that the COT data is only one factor and not the sole factor in price determination. Questions regarding the definition of commercial shorts and as to whether the shorts may be hedging their positions through unreported purchases elsewhere are worth considering. Large physical buyers have many avenues to acquire bullion and do not have to buy through the COMEX and take delivery (indeed few do).

Ratings agency Standard & Poor’s is now warning that the US will have to officially - and imminently - raise its federal debt limit to over its $12.1 trillion debt ceiling. This is leading to real concerns of monetary inflation and currency debasement.

gold - futures cots

Silver: Silver is currently trading at $17.86/oz, €12.09/oz and £11.36 and looks as sound as gold from both a technical and fundamental basis. Silver’s nominal high at $50/oz of 30 years ago remains a viable price target in the coming years.

Platinum Group Metals: Platinum is trading at $1,348/oz and rhodium is trading at $1,750. Palladium continues its strong run and is currently trading at $333/oz.

Disclosure: no positions