The path of least resistance is down in the gold market as a series of lower lows has been extended for the fifth straight session in a row. Obviously the upside breakout in the dollar has kept up the pressure on gold which is facing alternating fears of recession and deflation.

In retrospect, the gold market has shown little ability to fully reverse the damage inflicted on the charts from last week. However, the bull camp should be cheered by IMF news that China increased its gold holdings in February by 9.9 tonnes, especially with China in the two months ending in February raising its gold holdings by nearly 22 tonnes.

Unfortunately for the bull camp the gold market did not respond definitively to private analysis suggesting gold demand this year would reach a four year high and that suggests would be buyers are simply not ready to jump into the fray. At times last week, we thought gold and silver were under pressure due to deflationary physical demand type selling pressure, but the inability to rally yesterday in the face of a positive flow of economic news suggests gold and silver remain off balance and vulnerable.

In looking ahead, we favor the bear camp as the dollar index has pierced the 97.00 level and there would not appear to be much competition for the Dollar.

In yet another negative development exchange traded funds reduced their holdings of gold by 379,477 ounces which reduced their year to date purchases to a net 830,295 ounces. The decline in holdings yesterday was the largest in over 12 months. Silver ETF's also cut their holdings by 736,156 ounces which brings this year's net sales to 6.16 million ounces.

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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.