While the Dollar range up extension pressured gold and silver prices in the Tuesday morning trade, the Dollar fell back in a fashion that the bear camp in gold has to be a little frustrated. In fact the gold bulls seem to be capable of shifting their focus from bearish outside market forces (like risk-on and declining macroeconomic flight to quality) to alternative bullish themes like the hope for a recovery in physical demand.

While the market hasn't paid that much attention to classic supply issues there is a threat of a strike at Sibanye following news that the company might close unprofitable shafts. In the end, the action in the Dollar has been a solid force for the daily direction of gold prices for several months and therefore buyers should be poised to exit long gold and silver positions in the event that the March Dollar Index returns to 96.85 or prices start to erode in sync with big stock market gains!

The Commitments of Traders report for the week ending January 15th showed Gold Managed Money traders reduced their net long position by 6,142 contracts to a net long 43,806 contracts. Non-Commercial & Non-Reportable traders are net long 133,866 contracts after net selling 9,906 contracts.

In conclusion, internal fundamentals might have little control over gold prices over the coming 3 days and expanded volatility should be expected. The Commitments of Traders report for the week ending January 15th showed Silver Managed Money traders are net long 39,349 contracts after net selling 3,459 contracts. Non-Commercial & Non-Reportable traders added 2,722 contracts to their already long position and are now net long 72,854.

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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.