It could be that the markets got a bit over-hyped with the traded tensions between the US and China on Monday. It has been suggested that the latest round of tariffs that China announced yesterday are not expected to have much impact beyond those markets that have already been affected.

President Trump's optimistic comments about eventually getting a deal signed seemed to calm the markets and spark a mild setback in gold overnight after it traded to a 5-week high yesterday.

However, tensions between the US and Iran are ratcheting up risk anxiety and adding to the safe-haven impulse. This was fueled by yesterday's reports of sabotage against four tankers in the Persian Gulf.

The dollar index traded to its lowest level since April 18th yesterday but managed to recover all the way back to unchanged on the day. But rather than focusing on the dollar, gold seems to be reacting more to the stock market.

If stocks resume their selloff today, we would expect gold to continue to work higher. June gold cleared a key psychological resistance level when it pushed above the $1,300 level on Monday. The market also penetrated trendline resistance drawn off the February highs, as well as the 100-day moving average.

July silver broke below support and traded to its lowest level since May 3rd early yesterday, likely off of the selloff in stocks, but it rallied back to unchanged on the day as it drew strength from gold rally. It was slightly lower overnight.

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