Gold was moderately higher overnight, as the trade consolidated Monday's gains. The market has staged a remarkable recovery since the US/China trade agreement started showing signs of failure early last week, and given that the situation is still tenuous, it may have more upside left.

One could argue that the 3-month correction has run its course and that gold is poised to resume the uptrend that began with the August 2018 low. The market seems to be ready to respond positively to elevated risk concerns, whether they come from trade disputes or from saber-rattling in the Middle East.

That's not to say that the market won't calm down for a while. We may have reached a temporary peak in bellicose talk between the US and China with Monday's "retaliatory tariffs" by China. Still, the major trade issues have not been resolved, and the chances of them flaring up again at some point look strong.

Increasing tensions between the US and Iran may continue to underpin gold. A drone attack on two Saudi Aramco pumping stations on Tuesday caused a major pipeline to be shut down. This comes on top of reports Monday that 4 tankers off the UAE coast (2 of them Saudi) were hit by sabotage.

The dollar has followed through on its bounce yesterday to trade to its highest level in almost a week, and yet gold gave back less than half of Monday's gains.

July silver was higher overnight, but it has yet to make a technical breakout the way gold has.

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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.