In retrospect, gold and silver have performed impressively this week given the ability to bounce in the face of a generally consistent risk-on environment. Apparently the markets continue to remain hopeful of a trade deal with the US President indicating that the US and China were "in the throes of a deal".
The markets are probably drafting some lift from further signs of weakness in the Chinese economy following reports that profits at Chinese industrial firms declined for the third month and saw the largest monthly decline in nearly 8 years! While not a significant issue, it should be noted that gold ETFs saw a 6th straight day of inflows with yesterday's inflows the equivalent of 52,489.
Unfortunately for the bull camp, silver ETF holdings were reduced by 60,561 ounces. Adding to the recent pattern of soft gold demand news, gold prices overnight in India closed lower for the seventh day in a row which in our mind suggests the Indian buyers are not yet stimulated by gold's recent return to $1450.
On the other hand, gold prices closed higher in Shanghai and President Trump did indicate that the US had to have a better deal than China given the pre-existing Chinese unfair advantage and that could once again violate the Chinese demand for the US to respect and treat the Chinese as equals.
Obviously December gold has shown further respect for the $1,450 consolidation low zone with this week's action and that should which give that level more credibility as support in the near future. On the other hand, the mere respect of chart support and modest positive price action in the face of higher equities does not set the table for gold prices to track consistently higher unless trade talks are definitively derailed.
Some press outlets were probably correct in their assertion that bargain-hunting buying did surface yesterday as trading volume in gold reached the highest level since November 7th. Going forward, we can't rule out gold fluctuating within a range bound by $1,479.20 and $1,450 for the rest of the holiday interrupted week but it is likely that gold will see some minor pressure this morning following US scheduled data.
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