Despite the persistent strength in the US dollar, the gold and silver markets are showing positive action today perhaps because of anticipation of the kickoff to this week's ultra-critical Fed meeting. However it is also possible that a massive data breach at a US bank impacting 100 million accounts is providing some flight to quality buying interest as the data exposed was thought to be very extensive in its nature.
We also suspect that gold, silver and platinum are garnering some lift from a return of inflows into ETF holdings. In fact one particular Silver ETF posted a record of 73.7 million ounces of holdings at the end of last week while Reuter's total silver ETF readings overnight jumped back up to 602 million ounces from the low last week of 589.9 million ounces. Gold ETF holdings also rebounded from the slide last week with holdings returning to 55.21 million ounces versus the recent low of 54.9 million ounces.
In a signal of potential major volatility into the Fed decision tomorrow, silver options trading has expanded to a pace that is likely to produce the heaviest trading volume this month since November 2010 and that in turn gives the recent silver bull trend added credence.
While gold and silver prices showed some gains yesterday and again this morning, they generally remain within coiling patterns which isn't surprising considering the number of very important geopolitical and economic events later this week. However, the gold action to start the trading week has been impressive especially when one considers the ongoing strength in the dollar and less market expectations of a 50 basis point US rate cut.
With the US rate decision due out early afternoon on Wednesday, that could leave "buy the rumor" in place today with any sign of weakness in the dollar resulting in more significant gains in gold and silver.
Surprisingly, the silver market lagged behind the gold market yesterday and again early this morning perhaps because of slack US data yesterday and from a lack of definitive risk on psychology flowing from the equity markets.
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.
