The gold bulls have to be disappointed in the technical action following the peak in gold prices yesterday as prices surged near a critical psychological $1600 level but then reversed and closed very poorly. It should also be noted that open interest declined over the last several sessions indicating that some longs might have been banking profits and moving to the sidelines.
On the other hand, despite the inability to hold all the gains forged yesterday, the April gold contract did manage to post the highest close since 2013! While the gold market is probably drafting residual support from the rapid expansion of infections inside China, it appears as if fear of a global problem from the virus is falling which in turn is probably dampening interest in gold.
Another limiting force for gold prices came from news overnight that Russian gold producer Polyus which announced a 2019 gold production increase of 16% over 2018 with their 4th quarter production up 26%. Total gold production from Polyus was 2.9 million ounces which makes the increase somewhat material to the global gold market.
Another minimal negative for gold prices was news yesterday from a Barrick Gold mine which showed its 2019 production to have exceeded initial guidance by 64,000 ounces. Yet another minimal negative for gold overnight came from news that the world's largest gold ETF trust saw a decline of 37,653 ounces yesterday. However, offsetting the outflow from SPDR Gold were larger inflows from 2 other ETFs which left a net purchase by ETFs on Monday of 10,292 ounces.
It should also be noted that silver ETFs added 6.22 million ounces to their holdings Monday and that was the biggest one day increase since August 14th of 2019.
While the gold market looks to remain underpinned from the potential global threat from the virus, without signs of an acceleration of infections outside of China, the golf market could be vulnerable especially with the dollar overnight forging another higher high for the move.
The charts in the silver market also look bearish with the market overnight temporarily slipping below the psychological $18.00 level and silver showing signs of concern for slumping physical demand in the event the global economy slows from reduced travel and consumer anxiety.
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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.
