With the gold market piercing consolidation low support overnight and trading back down to the lowest levels since January 3rd the bear camp clearly has the edge to start today. While the risk on condition isn't overly impressive to start today, the precious metals markets are content to extract further safe-haven premium from prices.
Certainly, the looming trade deal signing combined with positive US/Chinese currency-related discussions provides fresh selling impetus but we would also suggest Chinese import/export data overnight signals the Chinese economy is simply improving! While many doubt the Chinese can fully fulfill their purchasing agreement with the US and many doubt other more complicated portions of the trade agreement will be solved, those concerns are brushed to the sidelines in the near term.
In yet another negative for gold, stories overnight indicate that money continues to exit gold ETFs with 123,968 ounces liquidated Monday bringing this year's to date sales up to 371,273 ounces. According to Bloomberg SPDR Gold Shares last week saw $1 billion liquidated in a shift that is obviously the result of the impending trade deal signing.
Despite surging strength in the Chinese currency, the dollar enters today's trade in positive territory with the currency building consolidation support on the charts which in turn makes it unlikely the dollar will come to the rescue of gold bulls.
The focus of the gold market is likely to shift to US consumer price readings today with the headline reading expected to show a 0.3% gain. One does have to wonder if surging gasoline prices will result in a jump in the CPI as the month of December saw a low to high rally in gasoline prices of $0.24 (+15%). Unfortunately for the bull camp seeing CPI breakout above the long-held -0.1%/+0.3% range might be negative as that could shift expectations away from for an on-hold Fed.
Certainly, gold and silver prices are also under pressure because of an extremely large net spec and fund long positions, but so far the markets have not seen a wave of really aggressive stop-loss selling. Therefore we can't rule out a sudden aggressive wave of capital/margin liquidation especially with key chart levels in gold and silver violated early this morning.
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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.
