In a very strange market interpretation, it appears as if gold and silver are garnering safe-haven buying given the expectation for a near term signing of the Phase I trade deal. In other words, some are speculating that negotiations are intense and pressing toward an end game and apparently some feel the past pattern of failure/breakdown will be seen.
However, China has already increased imports of US soybeans over the last two months and has reduced tariffs on pork and many tech items which would seem to suggest they are already moving to fulfill widely anticipated components of a first step agreement.
In a slightly negative development, gold ETFs on Tuesday sold 54.4 million ounces of gold which is the largest single-day sale in 12 months which in turn brings gold ETFs to a net sales tally of 44.3 million ounces on the year! According to Bloomberg overall gold ETF holdings have also fallen to the lowest level in 12 months. Therefore it would appear as if some investors are seeing the close proximity of a Phase I trade deal signing as a negative and it is also possible that the unrelenting string of new record highs in equities has broken the safe haven back of a portion of the bull camp.
On the other hand, silver ETF's on Tuesday added 429,401 ounces of silver to their holdings, putting this year's net purchases at 83.5 million ounces.
In addition to news that the silver VIX jumped by 17% in a possible signs of a shift in focus away from gold and toward silver, the silver market was also presented with a bullish 2020 forecast from Barron's which projected silver and platinum prices would play "catch up" to their gold and palladium counterparts next year.
There were some projections of increased buying ahead of the Chinese New Year but we feel that is a bit premature. In a slightly negative development, increased political tensions in India have apparently deterred some gold purchases due to the protests but some would suggest safe haven incentives in India will ultimately lift demand.
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