Blue skies ahead for silver
Gold was steady but silver volatile as Comex March contracts matured. Suspension due to “technical failures” saw high volatility in silver which has since recovered.
At 13.00 Eastern Time yesterday, Comex suspended trading in metals and national gas contracts and options, citing technical issues. The suspension lasted about 40 minutes and all-day orders and GTD orders (good ‘till day) were cancelled. It came at a delicate time for the March silver contract, with the earlier prospect of deliveries demanded exceeding silver registered for delivery. Instead, they appear to have been cashed out.
Was this Comex’s way of defusing a silver crisis? We will probably never know…
In a difficult week for traders due to Comex contract expiries, gold and silver both firmed on balance. In European morning trade, gold was $5170, up $63 from last Friday’s close, and silver at $89.70 was up $4.20 Comex turnover was very subdued in both contracts.
Gold futures expiry, not being an active month caused few difficulties for traders who appear to be generally uninterested in the contract. Open interest is unusually low, which suggests that there is significant room for speculative buying before the contract is deemed overbought. The relationship between price and open interest is shown below:
This is an immensely bullish setup, unusual in character. Hedge funds and trend-chasers could buy up to 200,000 contracts before gold becomes overbought. Under those conditions, buying would not be restricted to Comex. Add in Chinese savers’ demand and we can justify a call for significantly higher gold prices.
Silver is much more interesting. Comex open interest has collapsed which is explained
