Not surprisingly a massive washout in global equities overnight from last week's trade actions resulted in a sharp range up move in gold to start the trading week. In fact gold reached a six year high and is being boosted further by additional weakness in the US dollar anxiety and speculation is rampant on the probable next moves from the US and or China with some press outlets now predicting a currency war.

In our opinion the currency war would likely result in a severe washout in the dollar and that could leave a large amount of global capital with some hesitancy in flowing toward US treasuries. Therefore the gold market might win out with very little competition throughout the marketplace.

Psychologically the gold market should see added lift from news that Gold ETF funds have now added holdings for 5 straight days with net purchases this year at 4.87 million ounces gold ETF holdings are now at the highest level in over a year.

Unfortunately for silver bulls Silver ETF's reduced their holdings in the last trading session but purchases for the year still total 74.7 million ounces.

Clearly the gold market is unfazed by news overnight from India where July imports were said to have dropped by 69% versus year ago levels.

The path of least resistance is pointing up with the next resistance point derived from the monthly charts up at $1500. While the news of a bullish gold survey on Wall Street could indicate the market is closing in on overdone status, gold has seen the "list" of bullish fundamental themes present early last month return and therefore the prospects of another leg up appear to be strong.

The latest positioning report in gold did show gold to have the largest net long since September 2016, but the market also showed a significantly larger net spec and fund long reading for weeks ahead of that peak and that might indicate the potential for additional buying fuel on the sidelines now.

The July 30th Commitments of Traders report showed Gold Managed Money traders added 13,848 contracts to their already long position and are now net long 231,365. Non-Commercial & Non-Reportable traders added 9,002 contracts to their already long position and are now net long 327,423.

While the silver market has recovered from significant declines last week, its charts are much less bullish and silver appears to be diverging somewhat with gold and we think that is because of its physical commodity status and the threat of renewed global economic headwinds.

Furthermore, the silver market has the largest net spec and fund long position since April 2017 and the market also has significant overhead consolidation resistance from the past two weeks around the $16.50 level. While silver could benefit from safe haven lift, we suggest gold is a better play for economic anxiety.

Silver positioning in the Commitments of Traders for the week ending July 30th showed Managed Money traders were net long 65,327 contracts after increasing their already long position by 11,166 contracts. Non-Commercial & Non-Reportable traders were net long 88,744 contracts after increasing their already long position by 7,197 contracts.

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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.