Gold and silver start the Tuesday trade action under pressure and vulnerable from both technical and fundamental perspectives. In fact bullish psychology has been reversed with what could be 4th straight day of downward action which clearly appears to be the result of newfound strength in the US dollar.

A sign of the shift in sentiment in favor of the bear camp is seen from a decline in gold ETF holdings of 170,301 ounces yesterday but that comes after an increase of 636,661 ounces for all of last week. Fortunately for the bull camp silver holdings in ETF instruments increase by 1.01 million ounces yesterday and that was the fourth straight session of inflows!

While it might be backward looking, gold sales from the Perth mint in January increased by 2,000 ounces from the prior sessions while silver sales increased by 36,000 ounces and that shows some demand in that region. However, residual strength in the dollar gives off the impression of a near term dollar uptrend and that could keep the bias in both gold and silver pointing downward today.

Clearly, the gold and silver markets damaged their charts Monday by extending a recent pattern of lower lows and lower highs, and both markets are under pressure to start today and therefore sellers appear to have both technical and fundamental control.

While some traders think that Chinese gold demand will fall off this week due to the holiday, it is possible that active holiday purchases will eventually boost gold demand readings. Over the short term, a lack of normal purchasing patterns could be seen as bearish.

In fact, with Indian jewelers noting adverse price sensitivity into the gold highs last week and gold in terms of Rupees even more expensive of late, bearish items would seem to outnumber the bull items.

We invite you to signup for our more comprehensive market update delivered directly to your inbox.


Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Financial Services LLC, unless otherwise expressly noted.