Despite seeing Hong Kong and Shanghai gold prices close higher, early US gold prices are tracking lower in the wake of a positive global equity market environment.
While not a major driving force for traders on a day by day basis, it should be noted that gold ETFs reduced their holdings again for the ninth straight session, with silver ETF holdings reduced for the seventh straight session.
On the other hand, the gold market should draft support from IMF reports showing Turkey, Russia, Mongolia, Uzbekistan, and the UAE all increasing their gold reserves in October. In fact, Russia added 72.41 million ounces in October after adding 72 million ounces in the prior month.
Unfortunately for the bull camp a sharp downward revision in the fourth-quarter GDP by the Federal Reserve Bank of Atlanta yesterday is being largely discounted this morning as a safe haven buying signal from an increased economic uncertainty perspective apparently because the trade continues to hope for a small deal from the trade front.
Another issue that might be applying some pressure to gold this morning is a modest rebound in the dollar but recently significant declines in the dollar did not yield detectable currency-related gains in gold. We would also note a bit of divergence between gold and silver/platinum which would seem to indicate a measure of risk on physical buying outside of the gold trade.
While a small trade deal could surface at any time, we think official Chinese media propaganda yesterday suggesting the Chinese are monitoring US impeachment hearings, indicates they might be in no hurry to sign a deal as there is a chance the President will see his political position weakened significantly and that in turn could soften his demands.
However, the rally off last week's low in December gold was engineered off declining volume suggesting that the bull case is not being as widely attended as was the early November washout.
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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.
