The gold market has flared sharply higher to start this morning and it has managed that rally without the typical forces of anxiety from equities and the economy and also without significant weakness in the dollar!
However the dollar has forged a fresh lower low and appears poised to test the lowest levels in the last 40 days and therefore currency related buying interest for gold is present in some fashion.
Certainly the bull camp is basking in the interpretation that the US Fed stands ready to come to the aid of the US economy if needed but in retrospect the Fed was not definitively dovish yesterday.
It is possible that gold is drafting some support from news that Venezuela is poised to default on a gold swap with the Deutsche bank as that could signal the beginning of a financial end game for the beleaguered nation. Some traders think gold is benefiting from news that an Iranian oil tanker might have docked in Hong Kong, as that would be a clear violation of sanctions which in turn would in a sense escalate US/Chinese tensions.
In the end seeing gold manage a slight gain in the face of a sharp rally in US equities, suggests that the gold market can rally without safe haven conditions. While some market pundits have suggested the economic anxiety event has passed for now, we see no such evidence from the geopolitical front to suggest anything but more trade conflict ahead.
In fact, it would appear as if both sides of the trade equation are into marketing efforts by dredging up anecdotal statistics showing the importance of their trade with the other party and therefore there is little sign that negotiation or compromise is taking place.
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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.
