Sentix: “Constructive situation” in gold and silver

Sentix: “Constructive situation” in gold and silver
Sentix: “Constructive situation” in gold and silver

The sentix report currently sees a “constructive situation” for gold and silver. A positive underlying sentiment among investors is encountering increasingly neutral sentiment and bearish investor positioning. However, a look at the weekly chart raises questions.

This week, the sentix mood index deals with gold and silver, among other things. The development of the gold price is considered in the context of the strategic bias and the positioning of the investors (non-commercials according to the Commitment of Traders Report).

The conclusion of the experts: The so-called bias for gold is constructive. Investors did not move from their positive attitude towards the precious metal. At the same time, sentiment is neutralizing while many investors are retreating.

Investors are leaving the market despite a positive attitude

The strategic bias denotes the medium-term market expectations. In this case, medium-term means six months. Investors’ strategic view and underlying beliefs about the market (gold in this case) are presented. According to the description on the sentix website, the indicator signals the basic willingness to buy and sell of market participants.

This bias has increased significantly in recent weeks from 0.3 to around 0.41. According to the makers of sentix, the index should not be rated anti-cyclically and often runs several weeks ahead of the overall market.

The neutralizing sentiment means that the short term market expectation (short term means one month) is not in a critical area. Too high sentiment, for example, is associated with the risk of price setbacks.

It is striking that investor positioning has declined significantly in recent months. The CEI1GNCN index, which measures the net positions of so-called non-commercial investors in futures contracts on gold, has roughly halved since late March/early April. The index is now at its lowest level since mid-2019.

Non-commercial investors are market participants who are primarily represented on the market for speculative reasons (and not to hedge physical stocks).

“Bias and Positioning Scissors” works

All in all, it can be said that the positioning of investors has fallen sharply, and that the medium-term attitude is significantly more optimistic again. The sentix experts conclude that this opens up a gap between bias and positioning – in favor of gold.

The current sentix report paints a very similar picture for the silver market. Here, too, a clearly declining investor positioning can be seen. According to the CEI1SNCN index, investors’ net positioning is close to zero. The strategic bias, on the other hand, has recently shot up from around 0.1 to 0.4.

According to sentix, the yellow precious metal is currently doing better in a relative comparison of gold and silver.

Many Gold and Silver Investors Disappointed: Is the Inflation Rally Coming?

Many investors have been disappointed with the development of gold and silver prices over the past few months. Silver, for example, was still worth USD 26 per troy ounce at the beginning of March – the current price is just under USD 18. The price of gold also reached its high in early March, when the price was USD 2,075 per troy ounce. The price is currently quoted at USD 1,710.

Many investors – especially those who consider precious metals as a protection against inflation and who got involved relatively late – are now surprised by the weak development. One reason for the moderate price development is the turnaround in interest rates. Since central banks around the world are raising interest rates, the opportunity costs for (non-interest-bearing) precious metal investments are increasing.

Chart wise, gold is currently at the lower end of a trading range that ranges from around $1,680 to $2,075. The price area at the lower end of the trading range has already been tested five times – in the weekly chart.

From a technical point of view, there is a significant support at this level, which could well trigger a correction of the recent downward movement. Conversely, a breach of the support would open up significant potential for further price losses from a technical perspective.


The article is in German

Tags: Sentix Constructive situation gold silver

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