Despite an early positive start to the trading week yesterday, both gold and silver reversed course and damaged their charts. Perhaps the silver market was the victim of a curse from a bullish Barron's article published over the weekend, or perhaps safe haven longs have simply decided to run for the exits because of two days of new record highs in US equity market measures.
So far gold and silver have not seen notable pressure from rumors the US is poised to offer tariff exclusion extensions on some Chinese imports. In fact the offer to extend the hold on tariffs would seem to suggest the trade talks are moving forward!
However ETF gold holdings yesterday increased by 32,267 ounces bringing this year's net buys to 11.1 million ounces. The dollar purchases made by gold ETF's yesterday amounted to $48.2 million and so far this year total gold holdings in ETF's has increased by 16%.
Silver ETF's added a minimal 12,184 ounces and their net purchases to date are 101.4 million ounces. However, the reversal to the downside does have clear-cut fundamental justification following news that the most important annual Indian seasonal demand window saw significant declines in sales relative to year ago levels.
The Indian Festival began at the end of last week (Friday), with some Indian dealers noting extremely soft sales with one retailer pegging the demand contraction at 40% under year ago tallies. On the other hand, some bull traders have suggested Indian gold buyers will be pulled into the market in the event that prices fall markedly and perhaps they may get that opportunity soon.
In fact given severe reversal/damage on the charts yesterday, signs of residual strength in the Dollar, more positive news on the prospect of a trade deal today and some suspicion on Chinese gold retail demand seen this morning, there continues to be a number of issues weighing on gold and silver prices.
Similarly the silver market has seen its charts roll over and point down again this morning and the market might have little in the way of solid support until $17.63.
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