Gold, along with the rest of the commodities complex, have come under selling pressure this morning

After a relatively stable Asian trading session, Gold, along with the rest of the commodities complex, have come under selling pressure this morning. Once again, uncertainty concerning the Eurozone is rife, which is keeping the dollar relatively strong despite worries over the upcoming politicking regarding US deficit reduction plans. As expected, Spain will have a new government, although markets remain unsure of the political strength needed to adopt a severe austerity plan that will steer this country out the current debt crisis.

Net speculative length increased again this past week, although only a marginal 9.1 tonnes were added (73.7 tonnes were added the previous week). The change in the net position was largely due to speculative longs being added (13.9 tonnes), with an increase in speculative shorts of 4.8 tonnes, detracting from the net improvement. Although only a marginal increase this week, the sustained improvement in the net position (now at 655.2 tonnes), is a signal that the speculative market is showing a growing confidence in gold’s prospects.

ETF buying continued apace, with 28.2 tonnes added this past week. This brings ETF holdings to 2,418.7 tonnes, a new high for the year. The continued ETF support is encouraging, and underscores the growing confidence in the gold market. Net speculative length continued to climb, with a strong 243.7 tonnes added over the past week. However, while the improvements
of the past four weeks are encouraging, net speculative length, currently at 3,251.8 tonnes (compared to the 2010 average of 6,123.3 tonnes), still looks relatively weak. The increase in the net position was largely attributable to a 219.3 tonne increase in long positions. Speculative shorts saw an unwinding of 24.4 tonnes. Market positioning remains weak, but there
are growing signs that investors are becoming less bearish on silver.

Gold support is at $1,697 and $1,690. Resistance is $1,723 and $1,744.