While the August gold contract raced to another higher high and pierced the $1450 level overnight, it has fallen back notably from that high in a fashion that could lessen bullish resolve.
However the net take away from the Fed news this week has provided the brunt of the buying fuel with more Fed members reiterating the need for action. Furthermore global headlines are carrying the potential for other central bank rate cuts and that has created a very favorable environment for the last trading session of the week.
In fact while the dollar is not falling precipitously this morning talk in the marketplace is that the US administration might be poised to allow or even pressure the dollar to bolster its trade stance and or to make American products cheaper to foreign buyers.
Another issue coming down in favor of the bull camp are suggestions from a J.P. Morgan asset manager suggesting he was prepared to ride US treasury yields all the way down to zero as zero treasury yields could force even more money into alternatives like gold and silver.
In fact there continues to be an avalanche of noted analysts, fund managers and even Australia's Perth Mint Director projecting higher gold prices ahead.
The silver market this morning has once again outperformed the gold market with another new high for the move, a new high for 2019 and the highest price since July 2018. We would also add that silver has managed to hold most of its overnight gains and perhaps most importantly silver fund SLV saw the biggest inflow in over 6 1/2 years earlier this week.
Overnight total gold ETF holdings increased to 56.3 million ounces versus 55.9 the previous day. Another factor to consider with respect to silver is London bullion market Association figures pegging the turnover in spot gold each week of $200 billion while the amount of silver changing hands each week is much smaller at $34 billion.
In short a smaller amount of money directed at silver might have a larger impact on prices. Certainly gold and silver prices are short-term overbought but a number of bullish fundamental themes are still in place. In fact the net spec and fund long might be building in silver but the most recent spec long of 43,872 contracts is a long way from noted overbought readings around 90,000 contracts.
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