While the global equity markets are not showing anxiety from what appeared to be aggressive Chinese Presidential comments overnight suggesting China was not afraid to fight back in a trade war, risk-off instruments are clearly in favor this morning because of that news.
In fact bonds, notes and the Japanese Yen are all higher with gold early on trading more than $10 higher! The gold and silver markets are probably drafting some of their initial lift from generally disappointing eurozone/UK PMI readings released this morning.
It is also possible that the safe-haven markets are benefiting from intensifying US Naval presence in the South China Sea as that is also stoking tensions between the US and China. It is possible that gold and silver might see some support from the oil market rally yesterday that put prices up to the highest level since the mid-September spike.
While the risk-off vibe yesterday in equities failed to lift gold, the partial risk-on action from equities this morning has not held gold back and that could be a testament to gold residual strength. However, it will be interesting to see if the trade negotiators will show an ongoing commitment to talks with an actual follow-through on a meeting next week in China.
Overnight gold and silver ETFs added to their holdings with 34,341 ounces flowing into gold ETFs and 240,540 ounces flowing into silver ETFs.
The overall dominating issue for gold and silver today will be primarily dictated by whether or not US negotiators will be traveling to China next week to continue talks. While the bull camp obviously has the edge early on, there will have to be specific negative trade comments to throw December gold above the last three-week consolidation high at $1479.20.
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