LONDON (Commodity Online): With the exception of COMEX gold, prices closed higher on the day for the sixth straight session on Friday. Gains were led by Silver again, which rose by 0.8% to close at $35.33/oz, a five-week high. Gold prices closed the day $2 lower at $1742.1/oz as the dollar strengthened modestly against the euro and equity markets extended their gains, said Barclays Capital in a research note .
Barclays economists note that global risk sentiment has been skewed to the downside, leaving financial markets vulnerable to positive surprises and for the rally to be sustained, economic fundamentals need to confirm the more positive tone to economic sentiment.
Uncertainty remains regarding plans to leverage the EFSF, and the implementation of the bank capitalisation plan as well as the level of participation by Greek bond holders in the Private Sector Involvement. Investor interest in gold returned last week with ETP flows turning positive. Friday saw flows of 3.2 tonnes, taking inflows for the week to 20.6 tonnes and flows for the month to date to 16.8 tonnes. Short-term investor interest has also stabilised.
The latest CFTC data for the week ended 25 October revealed non-commercial positions in Comex Gold rose by 2.7k lots on the back of fresh longs more than offsetting fresh short positions. Non-commercial positions now represent 29% of open interest, still well below the peak of 51%. Tactical interest also rose in Comex silver, driven primarily on the back of new longs. By contrast speculative interest was scaled back across the PGMs as long positions were liquidated. PGM ETP flows turned modestly positive on Friday but remain negative for the month to date.
On the supply side, Industrias Penoles, the company that controls the world’s largest primary Silver mine, Fresnillo, reported silver output fell 13% q/q and 7% y/y to 9.1Moz. The company has scaled back its silver output target for the year to 41Moz from 44Moz.
