The gold market this week appears to be coiling as if a trend decision is in the offing. While the market appears to be drafting some support from deteriorating hopes for progress on US/Chinese trade issues, the headline flow from the Brexit situation has been undermining as some market participants think the looming deadline is prompting more motivated discussions between opposing parties.

Overnight there were supportive press reports predicting ongoing retail interest in gold and silver suggesting the next wave of buying might be facilitated by chatter of rate cuts from key central banks. In fact, some sources indicate back in 2011 gold prices were initially fueled by ETF inflows, but real strong retail demand took 12 to 18 months before fully responding.

It would appear as if the initial wave of inflows into gold ETF holdings started in October 2018 which would suggest the real flow of retail investment in gold should be getting underway now. Overnight gold ETF holdings expanded for the 21st straight session with a purchase of 20,845 ounces which brings this year's total purchase level 10.9 million ounces.

Silver ETF's saw a 7th straight day of inflows with the addition of 49,468 ounces bringing the annual purchases to 108.1 million ounces. Furthermore total gold holdings in ETF's reached the highest level since May 2013 while silver ETF holdings continue to hold 15 million ounces below their all-time record high levels.

It should also be noted that China in September continued to show strong imports of physical commodities like copper, Iron Ore and crude oil, and therefore soft Chinese gold demand expectations are being discounted.

Like gold, the silver market appears to have found some form of value with the low at the end of last week but it also appears to be coiling for a decision sometime later this week.

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