While the gold market is not throwing off definitive direction this morning there appears to be a minimally bullish bias in place from the prior four day's upward action on the charts and a vulnerable looking dollar. With an 8 day low in the Dollar yesterday, and 8 day high in gold yesterday was not that surprising.
In addition to a weak Dollar, this week gold has clearly been given fresh lift by reports that China posted its fourth straight month of net central bank gold buying (+11 tonnes!) Unfortunately for the bull camp, the amount of gold China added was nearly offset by a liquidation of IMF gold holdings by Venezuela of 8 tonnes.
In a minimally bearish development exchange traded funds sold 40,000 ounces of gold from their holdings yesterday which reduces this year's net purchases to 808,808 ounces. ETF holdings of silver were also reduced by 210,953 ounces which brings this year's net sales to 6.27 million ounces.
However, with the US potentially opening up a second trade battlefront with the EU (regarding airline manufacturing subsidies), an increased amount of geopolitical safe haven interest could return to the precious metals markets. Furthermore there also appears to be a slight uptick in macroeconomic uncertainty taking place this week in the wake of IMF downward global growth revisions and also because of significant weakness in Japanese machinery orders overnight.
Unfortunately for the bull camp, the rally over the prior three sessions was forged on deterioration in trading volumes while open interest has basically been flat, and that suggests to us the bull camp is reserved or hesitant. In short, geopolitical, macroeconomic and currency-related forces give the bull camp a slight edge.
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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.
