The noted rally in gold and silver prices this morning is not surprising considering the shift in a number of key fundamental flashpoints this morning. The groundwork for this morning's rally was initially laid late last week with the Chinese canceling an agricultural mission in the US farm belt.

In fact the US President suggested that he still has a very good relationship with the Chinese President but at present they were having a "spat" and that seems to suggest trade talks are once again at an impasse. It should be noted that Chinese officials have indicated that the cancellation of the delegation's visit to selected US farm states was not associated with the trade talks.

Adding into the bullish environment this morning are renewed recession fears in Europe following very disappointing PMI readings.

At the end of last week gold ETF holdings increased for the fifth straight day by 379,065 ounces putting this year's net purchases at 8.6 million ounces. It should also be noted that an analyst has predicted worldwide gold ETF holdings will reach a new record level ahead with recent holdings reaching the highest level since February 2013 and those holdings now within 100 tons of the all-time highs from late 2012.

While the situation in the Middle East remains generally supportive of gold prices, the prospect of diplomatic efforts by Iran at the UN this week could subtract some safe haven premium from gold prices. However, the gold market continues to hold a massive net spec and fund long positioning and the failure to hold closes above $1,500 could result in a wave of stop loss selling.

Gold positioning in the Commitments of Traders for the week ending September 17th showed Managed Money traders are net long 261,878 contracts after net buying 14,150 contracts. Non-Commercial & Non-Reportable traders are net long 364,726 contracts after net buying 17,705 contracts.

Over the weekend, silver received a number of fresh bullish forecasts with at least one projection targeting $20.00 per ounce. Other forecasts suggest silver will outperform gold, but a look at the charts late last week suggested silver had technical problems. However the September pattern of lower highs and lower lows in silver was clearly tossed aside with the stellar opening this morning as the action suggests the bull camp has stirred to lift.

Silver positioning in the Commitments of Traders for the week ending September 17th showed Managed Money traders reduced their net long position by 7,045 contracts to a net long 54,516 contracts. Non-Commercial & Non-Reportable traders were net long 85,212 contracts after decreasing their long position by 7,328 contracts.

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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.