The argument that silver has taken over leadership of the precious metals complex is brought home this morning with a very significant divergence as silver forged another yet higher high range up move and gold spent time in negative ground. The 3 AM Eastern-time reversal in equities was clearly prompted by the Chinese Commerce Ministry call for an end to escalation of trade tensions.
The perceived shift in trade conditions is also seen from confirmation that talks are actually taking place behind-the-scenes and that shifted a safe haven condition in gold from positive to negative. However with silver making a fresh high and remaining definitively in positive territory the sturdiness of the silver bull trend is noted.
However bullish analyst views toward gold continued to flow overnight with a Citigroup analyst predicting gold prices could rise another 25% to near $2,000 an ounce. Furthermore another analyst suggested the yield curve situation puts the gold market in a position to see a rally similar to 2011 with prices that year posting a low to high rally of $600.
Unfortunately for gold bulls risk on sentiment today means a slight corrective track in gold. In 2011, the silver market also saw significant upward motion with that year producing a massive low to high rally of $23!
On the other hand gold prices should be supported today following news that gold ETF's added another 303,405 ounces to their holdings yesterday which brings the net purchases this year 27.74 million ounces. Not to be left out silver ETF's also added 182,505 ounces of silver which is the fourth straight day of inflows.
Gold ETF holdings have returned to the vicinity of six year highs with silver holdings approaching the highest level since August 2017.
Despite the very positive early chart action in silver any conciliatory talk from US officials on the trade front following the Chinese comments could serve to prompt a profit-taking in both gold and silver today especially as equities could siphon off money from all safe haven instruments like bonds, notes, gold and silver.
In fact, traders must keep in mind that the net spec and fund long position in gold was either at or into new all-time record high levels earlier this week and that could feed selling interest if key chart support levels fail.
We invite you to subscribe to receive our more comprehensive market update delivered directly to your inbox.
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.
