With fresh technical damage in gold yesterday followed up today by additional declines the chart bias has shifted in favor of the bear camp.
Apparently the gold market is not benefiting from several Fed comments yesterday that seemingly returned a 50 basis point rate cut potential to the market equation. The Fed's Powell also provided supportive rate cut dialogue this morning from France where he pledged to "act to sustain US expansion".
Gold also isn't benefiting from fresh indirect US threats to raise tariffs on China again nor is the gold market benefiting from news of increased central bank gold holdings in June by Kazakhstan, Russia, Turkey and China.
While the silver market is showing some retrenchment this morning, it forged one of the largest up days in nearly a year yesterday and has seen total silver derivative holdings reach up to the highest level since August of 2017.
Silver is probably drafting support from a reduction in production projections from the world's largest silver miner. The reduction in production from Fresnillo was 3 million ounces and that reduction also included a 30,000 ounce reduction in full year gold production from the company.
Certainly the bear camp in gold was emboldened by a chain reaction of bearish forces yesterday with US retail sales deflating economic uncertainty, temporarily reducing rate cut prospects and lastly, providing the dollar with fuel for a noted extension of a recent recovery on its charts.
While a single strong US data point is not cause to deflate the prospects of a dovish global central bank environment, weakness in a very long list of physical commodities this week should give pause to gold traders looking to buy weakness in gold.
While the gold market has not paid that much attention to supply-side news lately, a pair of stories yesterday touting increased production should leave residual resistance hanging over prices today. In fact, Russian gold production in June was reported to have expanded by 38.9% compared to May and the 2019 first half gold production rose by 23.8% versus the similar period the year before.
In a less significant bearish development, Barrick Gold indicated production at one of its mines was on track to meet or beat its 2019 production targeting.
In short the bullish buzz in the gold market has been dampened and without a noted surprising headline, August gold might be headed back to consolidation support down around $1,390.
On the other hand, the silver market surprised the trade with a massive upside extension and the highest price since March 25th. Even more impressive is the fact that silver forged the largest daily gain in over a year in the face of moderate weakness in gold, strength in the dollar and a $2.00 decline in crude oil.
The silver market was apparently lifted by headlines touting increased investment flow into silver with one bank suggesting inflows have been more than 1000 tonnes since the beginning of June.
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