The gold market disappointed some bulls with its lack of a significant upward thrust yesterday following the latest anxiety wave from another lower low for the move in US equities yesterday afternoon. Furthermore seeing the market reversed chart direction this morning and seeing the prospect of a risk-on day in equities gives the bear camp the edge to start today.
It is also clear that reduced trade anxiety is set to prompt profit classic taking in gold and silver as the media is suggesting the two leaders are actually talking directly. While the gold market hasn't been limited by the recent uptrend in the dollar index a move above 98.00 this morning in the Index should thicken currency related resistance for gold and silver prices.
We also think macro-economic uncertainty was deflated slightly yesterday by a sprinkling of positive US data points as that questions the all-out recession expectation in the marketplace. Cushioning the gold and silver markets this morning is the news that inflows to ETF holdings continued with gold yesterday adding 103,571 ounces and silver ETF's adding 4.9 million ounces to their holdings.
Year to date inflows to gold ETF's are now 6.43 million ounces and 98.8 million ounces in silver with the fifth straight day of inflows. Therefore investors continue to show interest in gold despite two-sided volatility.
While the initial path in gold prices today is pointing downward and some chart points have been violated already the market should be supported by bullish news from Goldman Sachs which indicated increased central bank gold buying will continue from "De-dollarization".
In conclusion the bullish forces remain in place in gold but a short-term corrective track is underway because of the tempering of trade fears and from initial gains in US equities.
Technical traders will point to the fact that gold did find bargain-hunting buyers around $1520 but the initial failure of that level early this morning opens up the potential for a week ending setback to $1,500 if early equity gains and news that Trump is speaking to Xi extend into the close.
However given the spec and fund net long, traders should consider buying protective puts against futures, as the market could easily see another $62 range, as it did on Tuesday.
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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.
