The gold market continues to outperform visible fundamentals in the marketplace with the high this morning putting December gold $25 above this week's lows.

Certainly a negative twist in trade headlines yesterday justifies renewed buying interest of safe haven instruments like gold and silver today but the gains are being forged without anxiety flowing from equities and in the face of general strength in the dollar.

While details on the latest trade derailment are sketchy it does appear as if progress between the US and China has stalled again over the question of Chinese agricultural product purchases. In other words, it would appear as if a seemingly easy hurdle (China needs commodities) has once again stalled forward progress.

Adding into the allure of safe-haven instruments this morning is further evidence of slowing in China and developments in Hong Kong suggesting the situation there is poised to entrench and worsen.

While the gold market has not paid a lot of attention to classic supply-side news flowing from South Africa the trend of declining production from that area has been reconfirmed again overnight. Apparently South African gold output in September declined by 2.3% over year-ago levels while August gold output was revised to a decline of 5.3%. The South African gold production decline was the 24th straight monthly decline and the longest decline in output since 2008.

While gold ETF holdings were reduced for a 6th straight day yesterday, the market appears to be unconcerned about the potential fall-off in investor interest perhaps because of news yesterday of central bank buying.

The IMF noted fresh central bank gold purchases by Uzbekistan in October. While the increase in gold holdings reported by Uzbekistan was only 6.5 tonnes, the fact that the market saw fresh confirmation of ongoing central bank purchasing helped to offset what had become a fairly expansive flow negative demand stories over the last two weeks.

It is also possible that news reports of a Chinese hack of a US manufacturing consortium fostered buying off the potential for a more significant setback in trade talks inspired by the American side of the table.

On the other hand, given the massive three-week slide in gold and silver prices (gold declined $73 and silver declined $1.62) both markets clearly had the technical capacity to respect key chart support levels and therefore some of the bounce this week is attributable to needed technical short-covering action.

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