The reversal in the dollar overnight has been quite significant and is perhaps the result of a sudden extraction of safe haven premium from the Greenback due to a noted decline in global economic uncertainty. In other words seeing favorable services PMI readings around the globe and higher equities has undermined the dollar and subsequently benefited gold, silver and platinum.
In fact seeing a second better-than-expected Chinese data point this week combined with favorable data throughout the euro zone is significant on its own but that news is given additional power by rumblings that the exit deadline might be extended by a "year". Therefore it is possible that gold and silver will benefit like a classic physical commodities and a slight improvement in market psychology, but from the modest gains this morning in gold and silver there does not appear to be much in the way of extensive bullish sensitivity.
In fact given the four day low in the dollar index we would have expected June gold to have made a solid bid back above the $1300 level. Unfortunately for the bull camp ETF's continued to reduce their holdings of gold and silver with yesterday resulting in the liquidation of 159,056 ounces of gold and that reduces this year's net purchases to 671,240 ounces.
Silver ETF holdings were also reduced by 31,681 ounces which brings this year's net sales to 6.19 million ounces.
However gold prices overnight were higher in Hong Kong perhaps because of the latest talk of trade progress. In the end we suspect a weaker dollar will help to underpin gold but it will probably take significant downside extension action in the dollar to actually put gold back into a near term upward motion.
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