After not showing a direct reaction to the lack of substance on the trade issue from the Presidential speech yesterday afternoon, the gold market has come alive this morning with a surprise gain to start the Wednesday trade out on a positive. In fact, the President seemed to go in the opposite direction of presenting a deal with comments that the lack of a deal with China would result in "substantially higher tariffs".

Economic sentiment was clearly undermined by the fact that yesterday's Presidential speech did not produce a delay in US auto tariffs on Europe. In fact, in addition to threatening the Chinese with substantially higher tariffs, the president also indicated that significantly higher tariffs could be seen for "other" countries that mistreat the US.

In short, instead of seeing trade relations calm they appear to have eroded and that has provided risk-off buying of gold and silver in the early going today. It is also possible that some of the gains in gold and silver prices this morning are the result of anticipation of geopolitical anxiety flowing from the kickoff of the impeachment hearings in Washington.

However, the gold market might be deriving some support from the supply-side of the equation as the Venezuelan government has indicated that all mining gold sales contracts from earlier in the year will be considered null and void after the end of the Maduro regime.

In short, safe-haven interest has returned to gold and silver but it would not appear as if anxiety is running hot and significant gains are in order. However, the December gold contract is fresh off an eight-day low to high washout of $73 and therefore a simple technical bounce could be notable.

Apparently the market is discounting news that gold ETFs reduce their holdings for the fifth straight session with the Tuesday reduction amounting to 367,494 ounces. Silver ETF's also reduce their holdings for 3rd straight day but the reduction was very modest at 8,734 ounces.

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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.