While Treasury prices are showing the benefit of safe haven inflows gold is missing that action this morning because of signs of a potential recovery bounce in the dollar. Apparently macroeconomic slowing fears are present again but are not severe enough to prompt safe haven flows into gold.

It is possible that comments from Chinese officials overnight hinting at China's consistent negotiating stance and their suggestions that the talks must be carried out with mutual respect for both parties suggests the Chinese are indeed put off by comments from the US President that the US is not ready for a deal and therefore a deal is clearly pushed further into the future.

On the other hand the gold market has managed a $14 rally from last week's lows off political uncertainty in the UK, Middle East developments and North Korean weapons testing. It is also possible that EU complaints to Italy regarding their debt levels will provide some inflows to gold especially if the prospect of a return to Italian debt problems is noted by further headline flow on the subject.

The most recent positioning report showed gold to have a modest net spec and fund long with that positioning roughly half of the net spec and fund long from earlier in the year. Gold positioning in the Commitments of Traders for the week ending May 21st showed Managed Money traders were net long 24,378 contracts after decreasing their long position by 41,544 contracts. Non-Commercial & Non-Reportable traders were net long 101,184 contracts after decreasing their long position by 39,819 contracts.

The Commitments of Traders report for the week ending May 21st showed Silver Managed Money traders net sold 15,914 contracts and are now net short 30,860 contracts. Non-Commercial & Non-Reportable traders reduced their net long position by 9,659 contracts to a net long only 662 contracts.

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