We detect vulnerability in the gold market to start today as weakness in the dollar has had little impact, the charts favor the bear case and one can make a case that the dollar could manage to rally off notably weak and notably strong jobs data. We would suggest that some whisper numbers for the payrolls are for them to be soft as in the prior month, and therefore a major fundamental decision point could be seen in a number of markets today.
In the end a number giving off strong positive economic signals could result in money flowing to the dollar because it offers the best relative growth prospects, while a very disappointing number, could see money flow toward the dollar in a safe haven move off increased economic uncertainty.
However in a slight change of pace exchange traded gold funds saw an inflow of 54,771 ounces which brings the net purchases this year back up to 834,096 ounces. While the June gold contract managed to reject the brunt of the initial washout yesterday, the failure on the charts weakens the resolve of the bulls and emboldens the bear camp.
The silver market did damage its charts yesterday and therefore the path of least resistance looked to remain down today, but early chart action today has improved and that suggests silver might be able to delink with gold this morning. In other words it is possible that silver could benefit from fresh physical demand hopes in the event payrolls are "strong" even if gold falters.
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