Gold market update – Week 1 in focus

Sam Briggs

15/01/2021

Andrew Maguire reveals the official intervention behind the first week’s action in the gold markets.

 
Watch this week’s Live from the Vault for:

  • 2021 gold and silver price expectations.
  • Important Q1 and Q2 stairsteps for gold and silver.
  • Concerns around supposed bearish COT report addressed.
  • Strong physical demand vs new US dollar strength.
  • The marketwide impact of Basel III rules.

In this week’s update on the gold and silver markets, Andrew Maguire drills down on the fundamentals evidencing official intervention in the first two week’s trading of 2021.

Opening action

The moment New Year’s trading began, the upside Gold Futures driven Monday gap opened. However, the opening action of 2021 was rightly met with caution in the markets, with Andrew Maguire reminding us that “these futures driven gaps tend to get closed.”

As the week progressed, two major US Federal Reserve events in quick succession each triggered a slump in the gold price. With the Federal Open Market Committee (FOMC), 6th January, and the release of Non-Farm Payroll data, January 8th, both historically weighing on gold. A recurring market trend Andrew Maguire observed last year with the September release of Non-Farm Payroll data.

However, Andrew Maguire reports that the New Year downside gap close was far more aggressive than could possibly have been anticipated in such a strong physical market.

Watch Andrew Maguire look ahead to March and the global impact of Basel III rules on the gold price in fortnightly Kinesis show ‘Live from the Vault’.

Official interventions

According to Andrew Maguire, the fall in the gold price was the result of the intervention driven by the Bank of International Settlements (BIS). The BIS orchestrated two officially driven sell-offs geared around the obligatory US Federal Reserve events, as Andrew Maguire sees it.

Andrew Maguire explains that the official interventions experienced last week were counterintuitive, considering the bullish crosses exhibited in the markets. As gold got within touching distance of $1950 per ounce, Andrew Maguire believes the BIS instigated a sell-off that drove prices back down to their mid-December comfort levels. The precious metals expert reports that the official objective was targeting a rapidly rising gold price, preventing physical support levels from being anchored above the $1950 level.

In Andrew Maguire’s view, without calculated intervention, fresh stairstep supports at $1950 would have exposed deeply underwater offside unallocated BIS bets. Price movement that would have exposed the bank to a rinse of large shortstops, as well as initiating fresh sideline buying coming in at the $2,000 per ounce mark.

What’s next for gold?

The long-time wholesaler reveals that the bullish demand condition accelerated last Friday, referencing widespread reports of strong spot and physical gold buying. Andrew Maguire does not see the price being sustained below $1850.

Andrew Maguire’s parting thought:

Very short term volatility aside both gold and silver are coiling for a strong rally.

Next Episode: On next week’s Live from the Vault Andrew Maguire will give you an update on where the all-important wholesale market interest levels are aggregating.

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The opinions expressed in this publication are those of Andrew Maguire and do not purport to reflect the official policy or position of Kinesis.

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.

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