Political pundits and analysts were incorrect in assuming Iran would retaliate through third-party proxy terrorism groups with Iran launching direct missile attacks on various US military-related bases. However many markets have seen initial reactions to the retaliation significantly reduced and or reversed with February gold as of this writing sitting $30 an ounce below its initial reaction high!
While it is difficult to determine what the next move from the US will be, it is difficult to think that President Trump will stand idle and therefore gold is likely to continue to be one of the more sensitive risk-off markets.
On the other hand, gold ETF holdings yesterday jumped by 232,438 ounces bringing one composite gold ETF reading to the highest level since April 2013. Not surprisingly some press coverage overnight is projecting gold ETF holdings will now return to the all-time highs posted at the end of 2012. Current ETF holdings (by one media compilation) stand at 64.3 million ounces relative to the record high in that measure of 76.1 million ounces.
In other evidence of demand for gold, the Australian Mint saw December sales of bullion coins and minted bars up 45% from the prior month and up 170% from prior year readings.
In short, the current environment is very conducive to the bull argument with the temporary regaining of the $1600 level on the charts an obvious bullish headline capable perpetuating more investment inflows.
Certainly seeing the US dollar regaining its footing with a six straight day of recovery serves to limit some of the upward traction in gold. However, the focus of the market will now turn to the US Presidential press conference later today at that press conference was originally scheduled for yesterday and was obviously pushed back because of the attacks yesterday evening.
While there will be some employment-related data from the US released today and a Fed speech in the morning, it is unlikely those events will have a lasting impact on gold and silver prices as the focus should remain locked on Iran.
While the bulls have fundamental control, technical action is worrisome. The net spec and fund long have clearly exploded to even higher record levels and the bulls will now need further "military" action straightaway to extend. Critical pivot/failure pricing is seen at $1568.80 in February gold with similar pivot point/failure pricing in March silver seen at $18.325.
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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.
