In our opinion none of the key bullish forces for gold have been altered and the fundamental bias remains up. However a second day of calm in global equity markets from a lack of fresh trade barbs has temporarily undermined safe haven instruments like gold, silver, treasuries and the Japanese Yen.

On the other hand bullish sentiment continues to be stoked by Wall Street with Goldman Sachs predicting gold will reach $1600 off safe haven driven ETF demand. Goldman Sachs projects the $1600 pricing to take place over the next six months.

Currently ETF holdings are the highest since April 2013 mostly off this week's dramatic $700 billion destruction of US equity market value. Exchange traded gold funds added 487,584 Troy ounces to their holdings yesterday bringing this year's net purchases to nearly 6 million ounces. It should also be noted that yesterday was the biggest daily inflow since June 21st and the eighth straight day of inflows.

Silver ETF's yesterday added 3.1 million ounces bringing this year's net purchases to 80.5 million ounces.

The gold and silver markets certainly saw rate cut news reached a short-term overdone status following three rate cuts yesterday and we also suspect that the extreme upside volatility in bonds and notes created a temporary perfect storm for gold and silver.

Not surprisingly the silver market is also showing some corrective action this morning following a rally yesterday that finally got the attention of the market as silver gains at times outshined gold gains. While gold has recently made six year highs, the silver market has only forged a 14 month high and remains more than $3.50 below six year highs.

An issue that is probably facilitating some profit-taking in gold and silver this morning is the fact that China has officially pegged their currency just above the level that caused widespread consternation in the market earlier this week. In other words, in the market deserves some back and fill on the charts not an end to the uptrend.

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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.