While today might present a less volatile trading session there continues to be some questioning on the capacity to proceed directly to a reduction of tariffs without a break down in the phase 1 execution and that could help gold respect yesterday's lows.
While the headlines overnight tout ETF gold inflows of nearly $2 billion in October ETFs yesterday posted a second day of reductions in holdings with a sale of 86,814 ounces.
Surprisingly silver ETFs added 2.7 million ounces to their holdings and that was the largest single-day inflow in over a month.
In a minor negative development for gold two large bank strategists on Wall Street have apparently stepped aside from gold investments and one also has to wonder if other investors might migrate from gold and silver toward somewhat more attractive yields in Treasuries.
If there is a bright spot for the bull camp it is the fact that open interest in gold continued to rise despite this week's high to low washout of $56 as that could suggest there was a measure of bargain-hunting buying cushioning the washout.
However as we have been indicating for the past two weeks, the gold and silver markets were very vulnerable to a liquidation wave as internal fundamentals have consistently shifted in favor of the bears, and that combined with a sudden let down in global safe-haven interest from the trade front leaves the prospect of more longs fleeing to the sidelines.
In fact, with the gold market recently holding a net spec and fund long 328,000 contracts and very large gold ETF/ETN derivative holdings that should also leave the potential for further stop-loss selling in place.
While we think the market remains vulnerable to a further slide to the $1450 level the market seems to have found an interim value zone today around the October 1st spike low. At least to start today it would appear as if prices are drafting some support from second thoughts on a direct progression toward sequential tariff rollbacks.
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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.
