While June gold might not find sustained support from the $1,275 level today, that level should eventually be seen as a critical pivot point. However, June gold damaged its charts again overnight, the Dollar is applying some initial pressure and there has been some negative supply side news over the last 24 hours and therefore lower lows for the move are in order.
Apparently a five month old gold mining strike in South Africa was ended yesterday with a special payment made to miners.
In fact, we think the gold market might see additional pressure from the release of the Mueller report today as that is likely to result in a furor in Washington which in turn fosters geopolitical/economic anxiety and a higher US dollar.
In retrospect we see the Fed news this week as generally bearish toward gold as the Fed's Harker yesterday indicated that there "could still be" one more rate hike this year! However, the Fed's Beige book release yesterday did not result in a positive reaction in gold and for us that suggests the gold trade is simply leaning in favor of the bear camp and isn't easily distracted.
In another disappointing reaction in gold this week, it is clear that favorable Chinese economic data patterns are seen as a negative which clearly suggests the trade isn't in a position to benefit from the potential for increased physical demand from the world's largest demand market.
Overnight ETF gold holdings declined by 15,662 ounces and silver ETF holdings increased by 2.8 million ounces!
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