The gold market seems to be tracking positive again this morning after seeing some positive action in Asia. Reports of newfound evidence against the President regarding the Ukraine situation has prompted some anxiety.
ETFs saw buying yesterday and some equity markets tracked softer and therefore some safe-haven buying of gold is to be expected. Another issue providing safe-haven interest in gold is Iranian threats against European military units in the Middle East region, reportedly because of EU claims that Iran has clearly violated the terms of the nuke deal.
While the gold market should derive some support from overnight news of another decline in South Africa gold production in November the market has been aware of that long term trend for a while and is of a mind that overall global gold production is expanding and offsetting that loss of supply. November South African gold production declined by 5.2% versus year-ago levels.
Gold appears to be embracing the fact that the Treasury Department and the US Trade Representative confirmed that the tariffs on Chinese goods would remain in place despite the signing of the Phase 1 trade deal, as that apparently keeps enough uncertainty in the market to provide some ongoing safe-haven support to the precious metals.
Furthermore, weaker than expected CPI and PPI readings should provide minimal support to the metals on ideas a clear lack of inflation will keep the Fed on an accommodative path.
Gold should also draft support from the dollar break-out below a recent consolidation pattern to its lowest level in a week. If the dollar stays under pressure in the upcoming sessions, it may empower gold to test the top end of the consolidation pattern of the past week, but it probably would not be enough for gold or silver to take a shot at the contract highs from January 8th unless geopolitical headlines provide a surprise.
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