While the general bias remains up in gold prices a bit of indecision and coiling has been seen this week following last week's very impressive range up action. On the other hand the gold market has managed to hold its ground in the face of very definitive strength in the dollar and that is probably the result of constant headline flow touting potential central bank rate cuts.
In fact a major Australian Bank overnight suggested quicker than expected rate cuts in Australia while market sentiment this morning has also notched up the odds of ECB action today.
The gold market is also drafting support from Gold Fields Mineral Services news showing Indian gold demand in the April through June period managed an increase of 14% on a year-over-year basis. However that positive news was countervailed by GFMS statements that they expect Indian gold demand in the coming quarters to soften.
Unfortunately for the bull camp total gold ETF holdings decreased by 7,000 ounces to stand at 53.4 million ounces while silver derivative holdings also declined by 1.8 million ounces on a base of 591 million ounces.
Limiting the gold market today is news that Newcrest mining fourth quarter gold production came in above expectations but the market also sees pressure from lower gold trade action in Shanghai.
While the gold market earlier this week saw news that the Chinese central bank added gold reserves for the 7th straight month, that bullish news is countervailed this morning by a 35% month over month decline in Chinese June net gold imports into Hong Kong.
However some bullish sentiment might be generated by Kitco News coverage of an event sponsored by GoldHunt which is enticing people from Edmonton, Vancouver and Calgary to find three hidden treasure chests each with $100,000 worth of gold and silver. In short, the press coverage from that initial July 27th treasure hunt could generate headlines in mainstream media and that in turn could fan overall interest in all precious metals investments.
Unfortunately for the bull camp, the gold market did not show bullish sensitivity to soft US scheduled data which in turn might suggest the markets are growing somewhat bored with the rate cut mantra.
Obviously the strength in the dollar this week has caused some gold bulls to question positions, and therefore it is not surprising to see interest rotate toward silver, platinum and palladium.
While the supply-side of the silver bull market has not been a prominent feature on the recent rally, news of reduced silver production by a Russian miner should contribute to the ongoing optimism. In the end, a number of bullish catalysts remain in place and the edge should remain with the bull camp in gold but more specifically with the bull camp in silver.
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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.
