In addition to the dramatic chart reversal (which many suggest was a "key reversal"), the markets have seen a sudden geopolitical calm settle into position.

Adding credence to the argument of a blow-off top is the fact that yesterday's gold futures trading volume of 886,139 contracts was the highest daily trading volume since November 9th of 2016! In fact, the swiftness of the pause/end to the US/Iran clash appears to have yanked the safe haven rug from under the gold market in one fluid motion.

With stories from India suggesting the seven-year high in gold prices left buyers there shell shocked, one should expect to see the January Indian gold imports figures to come in much lower when they are ultimately released.

Evidence of the disappointment/shift in sentiment was also seen from liquidation of both gold and silver ETFs yesterday which leaves gold ETFs with net purchases this year of only 95,987 ounces.

Silver ETFs also cut their holdings by 815,432 ounces which brings this year's net sales level to 2.4 million ounces.

As we have said a number of times recently we suspect that the gold net spec and fund long position (adjusted into the high on Wednesday) reached a new all-time high level and that should facilitate rather significant corrective declines from stop-loss selling ahead.

In a longer-term supportive development, the World Gold Council has confirmed that gold-backed ETF holdings grew 14% in 2019, reaching all-time highs, and they projected Central Bank buying to continue to expand and they also suggested low interest rates would remain supportive in 2020 and that should keep some long term demand hopes alive but that news doesn't look to be capable of cushioning prices against a near term corrective environment.

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