It is somewhat impressive that the gold market has managed to sustain the bounce from the initial washout this week as the dollar has held up, risk on mentality is entrenched by ultra-strong US equity prices and ETFs have seen some liquidation this week.
However, we suspect that resistance this morning has been thickened somewhat by signs that US/EU trade relations might be improving with positive EU commentary regarding talks with the US on trade.
While not overly impressive, Chinese economic data came in slightly better than neutral which might contribute minimally to the risk-on bias and in turn make gold and silver less attractive.
Gold might be put under late pressure today if prices in the afternoon are tracking below $1550 as the market continues to maintain a very large net spec and fund long and the prospects of a moderate weekly loss and risk on psychology could result in a retest of this week's lows down at $1536.40.
Gold ETFs yesterday sold 182,084 ounces of gold bringing this year's net sales up to 453,034 ounces. Silver ETF's also reduced holdings by 813,630 Troy ounces bringing this year's net sales up to 7.79 million ounces and posting 3rd straight day of net sales. In other slight negatives,
Barrick Gold predicted their fourth-quarter gold production to be higher than market expectations and a Chinese company purchase of a Russian Gold Mining company might have been derailed.
In retrospect Iran did threaten EU personnel in the region this week as a result of EU complaints regarding enrichment violations and the Iranian leader has also rekindled some tensions by suggesting the strike against American forces was "the hand of God". Therefore some residual safe-haven support is likely to remain in place ahead of the weekend.
It is also possible that President Trump will become more aggressive with Iranian sanctions if it appears that other countries are now growing tired of Iran's enrichment violations.
In the end, risk-on from equities looks to limit/pressure gold but the capacity to trade positive in the face of negative impacts this morning shows some residual capacity on the part of the bull camp.
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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.
