Clearly the gold market benefited from disappointing Chinese economic news overnight with prices spending the entire overnight trade in positive territory.

While the gold market has not paid much attention to classic physical supply-side developments New Crest mining confirmed that total production declined by 5% in the latest quarter due to planned and unplanned shutdowns at its refining plants. Offsetting a portion of the lower Australian company gold production figures is news that Regis Resources expects its fiscal 2019 gold output to come in at the upper end of its forecasted range at 91,087 ounces versus 90,487 ounces in the previous quarter.

Unfortunately gold derivative holdings continued to decline with the fifth straight day of declines yesterday of 76,481 ounces.

Silver derivative holdings also declined minimally but posted their third straight day of declines.

The halt of trade in Gold-Finance shares in Hong Kong, after a significant decline and amid rumors of an investigation, could have an impact on gold prices if the company is forced to liquidate gold assets (it is unclear if the company even holds gold) or has promised gold assets in transactions.

While strong US consumer spending figures were seen as a negative to prices yesterday (because that removed macro-economic uncertainty and channeled money to risk assets the Dollar) $ weakness this morning is definitive and significant and that could project gold prices up to the highest levels in three weeks.

In fact given the dollar weakness following a very positive US GDP last week, positive consumer spending this week and remaining weak in the face of soft Chinese manufacturing survey's overnight it would appear as if sentiment toward the dollar has clearly shifted down.

Perhaps the June gold contract is headed for a retest of three month downtrend channel resistance up at $1,303.40 with that downtrend resistance line falling to $1,300.10 on Friday.

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