While the gold and silver markets could have been held back by the prospect of central banks moving to ensure sustained growth and reduced economic fear it would appear as if both markets took the Fed action yesterday (as well as Bank of Japan easing hints overnight) as a sign that the world economy is still at risk.

Adding into the economic uncertainty this morning is news that China might not be able to enter into a long term trade deal with the US, a 6th straight negative Chinese factory activity report and economic uncertainty from soft German retail sales and soft Japanese construction orders.

Furthermore, it would appear as if gold and silver are benefiting early today from a downside extension in the dollar but it could take a breakout down below the October low of 96.88 in the December dollar index to see currency-related buying of gold and silver become a notable force.

While ETF's were net buyers of gold yesterday (+74,745 ounces) the string of inflows into gold ETFs was broken on Tuesday and one of the larger gold funds (SPDR) did show an outflow of funds yesterday.

On the other hand, news this morning that Kazakhstan September central bank holdings increased by 12.1 million ounces refreshes a bullish theme that was a major component of the bull market earlier this year.

Unfortunately for silver bulls, silver ETFs reduced their holdings by 88,864 ounces yesterday.

In retrospect, seeing gold and silver manage to reject a sell-the-fact mentality following the Fed action yesterday has shifted psychology back in favor of the bull camp. In fact with December gold from yesterday's downside breakout low regaining $19 and silver regaining $0.43 we suspect further gains this morning could prompt follow-through stop-loss buying.

For now, the Fed action provides a measure of "cushion" for precious metals prices but the bigger question of where the economy really stands might be settled with the Friday morning US payroll reading. In the meantime, the edge shifts back in favor of the bull camp.

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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.