The gold market did manage a fresh 10 day high overnight and that should give the bull camp hope and worry the bear camp. Furthermore action in the US dollar should become more supportive as the dollar appears to be breaking down on its charts.
Gold should draft support from comments from Ray Dalio (Bridgewater Associates investment manager) as he indicated gold might be the investment for the low rate era.
Investor flows are also favoring gold and silver this morning with gold ETF holdings increasing by 237,303 ounces bringing the net purchases this year to 3.5 million ounces. Despite some conflict between reporting sources silver ETF holdings also continued to rise Monday with one service reporting six straight days of gains and another reporting eight straight days of gains.
We suspect the differential in reports is the result of different funds included in the total ETF holdings counts. It should be noted that bullish silver press coverage is increasing significantly which is not surprising considering the significant rate of gain in silver seen over the past three weeks. In fact September silver from the July low into the high this morning, has already gained $1.24.
So far the bullish arguments toward silver have been general in nature pointing to technical signals on the charts and the gold/silver ratio. In looking ahead the focus of gold and silver today will be squarely on US scheduled data as the revived hope for a series of rate cuts from the US is being adjusted with each scheduled report.
Unfortunately initial and ongoing claims are expected to be countervailing but expectations for the main headline number of initial claims call for a modest jump and that could favor the bull camp. Others suggest that speculators are buying into gold on weakness in anticipation of deterioration in US Chinese trade relations and that point of view was seen in a number of markets overnight despite the lack of a distinct fresh headline on the situation.
In the end August gold forged a double bottom on the charts above $1,400 this week and accomplished that action on fairly solid trading volume.
In the short term, the silver market has become the leadership market with yet another sharp range up extension this morning and a return above the psychological $16 level. In fact, silver has forged three very significant rallies in a row and managed that on rising open interest and that might suggest momentum is capable of lifting prices further. Initial resistance for September silver is seen at $16.17 and then at $16.27.
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