The gold market ended the evening session near unchanged from Friday, as a weaker dollar offset modest gains in the stock market. Gold enters the week with a slightly improved technical condition and a mixed to suspect fundamental condition.

However, two recent mine takeover actions (one hostile) should provide additional investment interest to the sector at large.

Obviously the direction of the dollar will be key to the direction of gold prices this week, but the bull camp might hold out hope that gold's ability to hold up at the end of last week in the face of "euphoria" toward the trade deal is a sign that it could shift its focus away from the ebb and flow of the dollar and toward classic physical demand. On the other hand, if the dollar index slides back below 96.12, it could reignite the currency related buying interest, and that would quickly lift the April contract back to the $1,350 level.

While the trade hasn't paid too much attention to the potential for supply disruptions in South Africa due to severe financial problems for the country's electric generating utility, that issue could surprise the trade, as the number of strike threats has grown to 15.

The $26 correction at the end of last week balanced the technical position, especially with prices managing to hold above a four month uptrend channel support line, which comes in today at $1,314.10 in the April contract. While the most recent positioning report understates the size of the net long with April gold starting the week $13 above the level where the last report was measured, the market isn't at a particularly lofty level yet.

The Commitments of Traders report for the week ending February 5th showed Non-Commercial & Non-Reportable traders net long 154,086 contracts. The silver market also managed to find some value on its charts around the $15.75 level, and its ability to close higher suggests it is poised to garner some classic physical buying in the event of a straightaway extension of risk-on psychology in the marketplace. The COT report showed Non-Commercial & Non-Reportable traders net long 79,143 contracts of silver.

We invite you to subscribe to receive 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.