The gold market looks vulnerable on the charts to start today with the market seemingly pinned down to the $1,325 level early. Fortunately for the bull camp the dollar index is showing only minimal gains and has not taken out the Thursday high in the early going today.
However the charts and bullish sentiment were ruptured by the aggressive washout yesterday. In retrospect the magnitude of the gains in the dollar this week do not justify the magnitude of the washout in gold yesterday and to us that suggests the driving force in gold has been a subtle shift in views toward the Fed's stance (they were less dovish) and ideas that safe haven/economic uncertainty will decline further following the trade deal that could be announced today.
Evidence of the safe haven/physical commodity market distinction can be seen with gold lower this morning at the same time that silver, platinum and palladium are tracking slightly higher. However it is possible that gold could display impressive bull market action by shifting its focus to embrace the potential for improved physical demand in the event noted progress is officially documented from the trade talks today.
Unfortunately for the bull camp, we suspect that a trade deal could result in further safe haven liquidation of gold unless the dollar knifes its way back toward 96.00. A positive development for gold overnight is word of another gold takeover deal of roughly $19 billion as that should keep speculative buying buzz for gold assets in the marketplace.
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