While the gold market showed an upside breakout in the early trade today, the potential for a major trend decision remains in place with Chinese sources indicating the talks will be short-lived. It is nearly folly to predict the next turn in the trade situation but given the vast number of minor unrelated conflicts between the US and China this week (visas, NBA, phone apps) it would not appear as if the environment is conducive to compromise.

However investment interest continues to flow toward precious metals with gold ETF's adding to their holdings for the 18th straight session which brings this year's net purchases to 10.8 million ounces.

Silver ETF's also added 48,173 ounces for a 4th straight session of inflows and a net purchases year to date of 105.7 million ounces.

While the market has not shown much sensitivity to a long-held pattern of declining gold production from South Africa, August gold output declined again by 5.4% versus year ago levels. Furthermore July South African gold output was revised even lower with a 13.4% year-over-year drop!

In retrospect it appears as if the Fed news yesterday failed to provide enough dovish information to satisfy gold and silver bulls but the dollar is showing signs of failing on its charts this morning and we suspect gold and silver will draft some support from that as the markets lay in wait for the next trade orientated headline.

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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.