Not surprisingly the gold market is showing some slight retrenchment this morning following indications from the White House that the President will travel to Beijing this year to begin phase 2 of the trade talks.

Apparently seeing China cut its bank reserve ratio again (which is thought to inject nearly $115 billion into their economy) has failed to start gold out on a definitively positive track today.

Furthermore, the gold market has not garnered support from a slight increase in uncertainty from UK, German and Chinese factory activity readings which were disappointing. While not overly significant gold ETFs in the prior trading session saw inflows of 24,597 ounces bringing holdings up for the fifth straight trading session.

Silver ETFs reduced their holdings by 1.17 million ounces.

Perhaps the bounce in the dollar this morning is providing a bit of pressure on gold as the downtrend pattern has been fairly aggressive in the Dollar over the past five trading sessions with the dollar earlier this week reaching the lowest level since the middle of July.

We also suspect that gold is off its game to start the New Year because of soft Indian gold imports in the April through November timeframe. Indian gold market participants blame the increased import duty for the decline while others suggest high prices and disappointing economic growth have contributed to the reduction of imports.

However, in looking ahead the trade remains bullish toward gold prices in 2020 with central bank gold buying, residually low-interest rates and investment rotation into gold providing the structure for a continuation of the second half 2019 rally.

In the short term, risk on psychology, disappointing physical demand news from India and the bounce in the dollar could set the stage for a minor setback to recent consolidation low levels around $1512.10.

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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.