So far this week the gold market has performed impressively in the face of signs of strength in the dollar and with the dollar falling back slightly to start today that gives gold a slightly positive start.
With the US/Chinese trade talks concluding in Shanghai and the President yesterday seemingly claiming the Chinese were ripping off the US, it would seem unlikely that government communiques later today will conclude progress was made and that could provide gold with some minimal support.
In fact, given chatter in the media predicting a continuation of US/Chinese trade tensions into next year, it could be difficult to fully remove trade as a safe haven force for gold prices.
Other minimal support for gold overnight came from news that Kazakhstan increased its gold holdings in June by roughly $2 billion and news of a 4.8 ton inflow into gold backed ETF's.
In the end with Gold seeing spillover support from strength in gold mining stocks yesterday that action should probably continue ahead the Fed decision later today.
On the other hand, precious metals markets are somewhat hopeful of a 50 basis point rate cut and therefore some portion of the bull camp might be disappointed today. However, it is difficult to make a 25 basis point rate cut a lingering bearish development for gold and silver prices, but a conservative move today could certainly result in a wave of dollar-orientated selling.
Unfortunately for the bull camp, the gold market rally over the prior three trading sessions saw declining volume and open interest figures and that either suggests bulls are unwilling to commit ahead of a key macro events or that bullish sentiment is indeed waning.
In the end, the gold market in particular faces a significantly important juncture today as the gold market rally from the May lows was built on a "list" of bullish fundamental forces and today will be a test of several of those elements.
While silver traders continued to tout a veritable explosion in silver options trading volumes, trading volumes in silver futures have consistently fallen from the July 19th high which suggests buyers might be balking at prices above $16.25.
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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.
