Certainly the US/Chinese trade situation (one of the most important bull forces) remains highly fluid and past history suggests further tension instead of resolution, but it is possible that situation will become less of a day-to-day impact as the negotiations take place via communiques and conference calls.

In our opinion, the second most important bull force for gold over the prior two months was the 250 point decline in the dollar and since June 25th the dollar has gained back two-thirds of its May and June losses!

Yet another bull premise that has been tempered is the hope for increased demand from India. In fact Indian gold demand might contract as the hope for lower import duties switched into an actual "increase" in duties with comments from officials last week.

Fortunately for the bull camp demand could hold up from central banks with the Chinese Central bank posting its 7th straight month of purchases last month.

Yet another bullish fundamental reversal is less definitive as the prospect of a US rate hike at the end of the month is still thought to be likely, but that potential was reduced by the stronger-than-expected US nonfarm payroll result.

From a technical perspective, the gold market into the late April lows held a net spec and fund long position of 57,761 contracts and that spec and fund long positioning recently reached a peak of 302,909 contracts.

Lastly, investors seemed to turn actively bullish toward gold in the middle of June with 14 straight days of inflows into gold ETF holdings which coincided with a $100 per ounce rally into the highs but that string was broken last week with holdings reduced by 78,757 ounces on Friday. Total 2019 gold ETF purchases year to date are 3.09 million ounces.

In conclusion, we see the gold market as vulnerable especially given the market's inability to take out the June high on extremely active trade and violent two-sided action over the last two weeks.

In silver, it goes without saying that the gold market travails are likely to spill over into silver which appears to be even more vulnerable because of extremely damaging chart action at the end of last week.

We invite you to subscribe to receive our more comprehensive market update delivered directly to your inbox.


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.