Like all markets that go up aggressively in a compacted period of time, the gold and silver markets were in need of both technical and fundamental corrective price action following a series of multi-year highs posted earlier this week.

However, prices should be underpinned this morning in the face of a lower peg in the Chinese currency but also because of the idea that the Chinese economy might be standing up better (strong commodity import news) than expected in the face of tariffs, as that might suggest the Chinese are capable of standing toe to toe with the US for a long time.

The bulls should also continue to benefit from swirling expectations for a number of global central bank rate cuts ahead especially with another bank cutting rates overnight.

While the gold market has not paid that much attention to classical supply-side developments lately seeing Chinese first half gold output fall by 5% should certainly provide a measure of fresh support for prices today. In the short term the ebb and flow of ETF investment interest will be a critical measure of bullish resolve.

Overnight Gold ETF holdings expanded for the 9th straight session with the addition of 151,959 ounces bringing the total year to date purchases to 6.05 million ounces.

While the markets aren't making a big deal out of the lower Chinese currency peg, that issue is capable of prompting a tweet/threat from the White House.

Lastly Dollar action below the 97.00 level this morning gives the bear camp an assist from the currency front.

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