While the gold market has consistently shown resiliency it is posting a bit of corrective action to start today and that weakness does not appear to be associated with currency market influences.
Perhaps the gold trade is partially disappointed in news of a decline in Hong Kong net gold exports to mainland China. Apparently Chinese imports from Hong Kong fell by 13.6% in February versus January. However Morgan Stanley suggested overnight that central bank gold buying in the first quarter (thus far) has totaled 126 tons and a four quarter tally at that rate would represent the highest purchase rate since 2015.
Seeing June gold reach above $1,325 and post a new high for the month yesterday suggests it can rally off safe haven interest associated with geopolitical developments as well as from increased economic uncertainty. We would also note gold has been able to forge gains despite periodic strength in the dollar and with the Dollar showing minor weakness this morning that should help to shore up support on the charts.
While silver will continue to hold onto gold's coattails, too much deterioration in macroeconomic sentiment and broad-based deflationary action in other commodities could result in silver negatively converging with gold. In the end Federal Reserve members are touting their dovish views through the end of the year, and that should, along with US political fighting, keep the dollar off balance.
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