Following the most expansive trading range of the last 12 months, the gold market is a little off balance this morning because of the tempering of US/Chinese trade tensions.
Surprisingly gold and silver aren't benefiting from lingering global slowing fears this morning following the weakest Chinese industrial growth in 17 years and an apparently media obsession with the potential for an inverted US yield at some point in the coming trading session.
Clearly, the Trump tweet stopped the gold and silver rallies in their tracks with suggestions that the US was delaying some tariffs.
However, the more damaging development from yesterday is that meetings next month might be in the works. In fact the return to global optimism is justifiably facilitated by Chinese official dialogue acknowledging the conference call between top US and Chinese trade negotiators.
Unfortunately for the bull camp, yesterday's events resulted in a six day upside breakout in the dollar and more gains in the dollar should be expected in the event that the flow of trade dialogue from either side of the Pacific gives indications of a set date for talks. A
lso unfortunately for the bull camp gold ETF funds sold 350,321 ounces of gold yesterday for the biggest daily liquidation in three months but silver ETF's saw inflows of 1.7 million ounces bringing this year's net purchases to 87.2 million ounces.
However, the large outside day range with a lower close in gold combined with a recent record spec and fund long positioning leaves the market extremely vulnerable to technical stop loss selling. Therefore traders should monitor action at the $1,498.60 level and then again down at the $1,488.90 level as violations of either those levels could project prices down to at least $1,470.
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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.
