The dollar index forged yet another higher high for the move overnight and that partially explains the weaker track in gold prices early today. In fact given the fresh damage on the gold charts to start today, the bear camp would appear to have the capacity to press August gold prices directly down to $1275.
Apparently the market has discounted news of further central bank gold buying with the latest purchase coming from the Philippines. Gold should see some support from Saudi charges of Iranian complicity in recent Middle East oil asset attacks as tensions in the region should be stoked by a Summit convened to send a message to Iran.
Another potential flight to quality support angle comes from Goldman Sachs suggestions that Chinese rare earth curbs will indeed have a significant impact on the global economy. However the gold trade does not appear to be in a position this morning to embrace the positives and given weakness in a number of physical commodities we see the path of least resistance pointing downward.
While gold has not shown a definitive reaction to scheduled data of late, a veritable avalanche of US scheduled data today might result in some temporary volatility in the dollar and some spillover volatility in gold.
While gold ETF's saw 143,765 ounces inflow into holdings yesterday those holdings have still seen a net liquidation this year of 493,786 ounces.
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