After gold and silver tightened their coiling patterns earlier this week a failure this morning in the gold market sets a decidedly bearish tone for the last trading session of the week.
While dollar gains are modest this morning and the Dollar is probably contributing to the weakness in gold it is likely that gains throughout global equity markets from trade rumors have pulled a wave of safe haven longs from gold and silver. While the markets were tossing around the idea that the US might be poised to remove tariffs as a show of good faith in the negotiations administration officials have failed to confirm that prospect.
Certainly some of the selling in gold this morning is fresh outright selling considering the failure to hold what had become a fairly solid consolidation low zone on the charts. However the gold market ends this week with total gold derivative holdings reaching up to the highest level since June of last year, while silver derivative holdings have dipped down to the lowest level since December of 2016.
It is possible that the gold market is seeing some liquidation off reports that recent gold price gains have deterred Indian and Chinese buyers and that is partially confirmed by anemic buying in Indian in the face of an expanding gold price discount. Not surprisingly Chinese gold prices continue to register a premium of six dollars to nine dollars but regional sources suggest that demand has been soft. In fact some Chinese dealers have indicated that buying head of the lunar New Year celebrations has already taken place.
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