The bull camp in gold has to be very discouraged again this morning as prices have sagged in the face of a fresh lower low in the dollar! Apparently world stock markets were cheered by earnings news from Apple which cited stabilizing sales in China and that environment has seemingly siphoned off capital from gold and silver.

In fact seeing some US equity measures register and hold new all-time highs overnight leaves money flowing out from safe haven gold and into assets with very attractive performance. So far the gold market has not benefited from significant violence in Venezuela as the opposition leader is supposedly making a major push to oust the current president and the military is reacting to squelch the uprising.

It is also possible that gold and silver are seeing some long liquidation ahead of this afternoon's FOMC statement/decision as some traders see recent US data to be improving enough to alter Fed dialogue. However unless the Fed alludes to strength in the economy and somehow notes an improvement in inflation, we doubt the Fed will be negative to gold and silver prices.

In a sign that investors remain cool toward gold, ETF holdings were reduced yesterday for the 6th straight trading session. The net change in gold ETF's this year is now negative with net sales at 205,137 ounces. While silver ETF's increase their holdings by 26,253 ounces the silver market has seen net sales this year of 5.2 million ounces.

The gold market should be held back because of news yesterday that Russian gold miner Polyus projected gold production this year to rise by more than 16% relative to last year especially given that another gold producer reported better-than-expected first quarter gold output.

While gold has not responded in kind to the current dollar slide, a slide below 97.00 in the $ could still power up gold.

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