The gold bulls looks to start the new trading week out with a residual geopolitical safe haven edge from the latest tariff announcements from the US and China last week. With the added benefit of a significant washout in the dollar last week, gold and silver were justified in making new 2019 highs into the Asian opening.

While both parties have indicated they will fight to the end on trade, and that is certainly capable of sinking global equity markets, a comment from the President suggesting the Chinese are willing to talk certainly knocked gold back sharply from the new highs and pulled silver prices back by 17 cents!

However, the Chinese foreign Minister suggested that no calls were made from Chinese officials and no talks were planned in the near term and yet prices did not rebound. Therefore we are a little surprised in the markets lack of a distinct turnaround especially given the escalation of the protests in Hong Kong.

Fortunately for the bull camp flows into gold and silver ETF's continue with the gold holdings reaching the highest level since June 2018. In a negative fundamental development that might be given more weight in other market environments, Hong Kong July net gold exports to China declined by 42% on a month over month basis leading some to conclude softer demand for gold inside China.

However some have suggested normal flows from Hong Kong to mainland China might be impacted by the turmoil in Hong Kong. Unfortunately for the bull camp, the gold market posted yet another new all-time record spec long using futures and options net positioning.

Furthermore, the gold market from the COT positioning report calculation rallied an additional $50 per ounce which suggests another record long is possible this week. In short, the markets are overbought but certainly capable of significant further gains this week.

The August 20th Commitments of Traders report showed Gold Managed Money traders were net long 285,090 contracts after increasing their already long position by 7,122 contracts. Gold Non-Commercial & Non-Reportable traders hit a new extreme long of 386,110 contracts. Non-Commercial & Non-Reportable traders net bought 7,416 contracts and are now net long 386,110 contracts.

The Commitments of Traders report for the week ending August 20th showed Silver Managed Money traders were net long 47,967 contracts after increasing their already long position by 10,201 contracts. Non-Commercial & Non-Reportable traders added 5,600 contracts to their already long position and are now net long 78,357.

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