While the gold market started out Thursday morning with a lot of upside promise, the gains ultimately proved to be less than impressive. In fact, given that the US dollar tracked lower this week and more importantly forged a downside breakout on its charts yesterday, the modest gains in the gold market Thursday suggest that the market might not be poised to streak higher.
However, geopolitical and macroeconomic anxiety should remain high from; trade issues, the Iranian situation and from what appears to be an avalanche of economic reports today. In fact, many times geopolitical issues can "flare-up" ahead of weekends and in the event that US/Chinese trade talks are extended, that will certainly leave the potential for uncertainty in place over the coming 72 hours.
In retrospect, the gold market has not seen a tight inverse relationship with the action in the dollar this week but a sustained trade below 97.01 and more importantly below 96.87 could return the currency influence to a key driving force.
In retrospect, there has been a lot of bullish long-term classic demand news that should eventually lift gold prices higher.
However, the most important demand side development/reconfirmation is a buying wave by central banks as that action isn't typically influenced by the ebb and flow of economic conditions and the amount central banks are buying is significant to the gold trade.
On another bullish track, with another decline in South African gold production, one can even suggest classic supply fundamentals also favor the bull camp. Unfortunately, the near term direction of gold will be heavily influenced by trade negotiators but given the trend of the news, the bull camp holds an 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.
