The gold market performed impressively yesterday by making gains in the face of limiting outside market forces and that pattern has clearly extended again today! While overnight rhetoric flowing from China has not resulted in fresh anxiety, China continues to suggest that economic conditions in their country project even lower yuan values ahead and that might also be cause to move more money toward gold.
In fact Chinese central bank gold reserves at the end of July were 62.26 million ounces versus only 61.94 million ounces at the end of June and that was an 8th straight monthly expansion. Classic investment interest continues to flow toward gold through ETF's with total holdings expanding for the 7th straight session and putting the total holdings at the highest level in a year.
Investment also flowed into silver ETF holdings yesterday with 2.9 million ounces purchased and total holdings reaching 608.8 million ounces. Other bullish overnight developments came from India where the RBI surprised with an unconventional rate cut and that bullish news was accentuated by suggestions from a Royal Bank of India official who instructed Indians to buy gold opportunistically.
Dampening the bullish news flow from India is the fact that gold in terms of the Indian currency has posted a series of new record highs and is reportedly dampening interest at the physical/jewelry retail level. While it would appear that the "trend" is entrenched in the upside wave the December gold contract has reached a psychological milestone at $1,500 and today does not appear to be a high anxiety session poised to facilitate sharp additional gains.
However, it is safe to assume that many traders and investors are anticipating further escalation of tension between US and Chinese officials, with uncertainty stoked by comments from one noted analyst yesterday who suggested that the trade battle could get out of hand and beyond control of the leaders.
In fact, the noted analyst also suggested that currency wars are extremely difficult to control and can swing out of control easily. Signs that the US thinks the trade war will extend and perhaps worsen came from White House indications that more help for US farmers would be on the way.
In the end, the bullish resiliency in the gold market again overnight suggests the uptrend bias remains in place and the market looks to be capable of testing the next chart measuring level of $1,525. After lacking the same bullish action as was present in the gold market silver has launched higher with a distinct breakout that could now target $17.00.
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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.
