The gold market has extended its coiling pattern with this week's action particularly narrow and also with trading volume low and open interest rising, it would appear that a major trend decision looms ahead. Unfortunately, the pattern has been for a decline of overall global uncertainty recently and that provides a generally bearish environment for gold.
On the other hand, seeing the Chinese President overnight issue a very firm warning about foreign interference in Chinese domestic affairs would seem to rekindle the potential for a failure to actually sign the Phase I into an official commitment.
The gold market apparently discounted news of a decline in Hong Kong gold exports to mainland China overnight with the year to date decline pegged at 38% and it should also be noted that exports to mainland China in July and October were down even more as the violence worsened in that period. However Shanghai gold closed higher and the early US price is within striking distance of this week's highs.
The bear camp probably sees some assistance from the news that a gold mine in Ghana that was idled five years ago has had its first physical output again and the mine is expected to produce roughly 350,000 to 400,000 ounces a year.
Yet another negative for gold to end the trading week is India's fresh restriction on the import of gold and silver in powder and other unwrought raw forms.
In a surprising development gold ETFs saw no change of note in their daily holdings while silver ETFs saw a reduction of 128,853 ounces. It should be noted that the silver ETF holdings are now at the lowest level since August 9th and the silver market is also forging an extremely tight coiling pattern.
Without disappointing US scheduled data yesterday and the seemingly threatening Chinese interference comments overnight we would be patently bearish toward gold to end the week but some geopolitical and economic uncertainty evidently remains in place.
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