While gains in global equity markets overnight have put gold off-balance to start, the sentiment flowing from equities is not definitively "risk-on" and psychology remains somewhat on edge due to the virus situation. However, the dollar has forged yet another higher high and has reached the highest level since the beginning of December and is somewhat limiting the bull case. On the other hand, risk-off markets like treasuries and the Japanese Yen are tracking higher and gold ETF holdings yesterday increase for the 5th straight trading session. In fact, gold ETF funds added 275,444 ounces on Tuesday bringing the annual year to date net purchases up to 884,814 ounces. Silver ETFs also added 485,294 ounces which reduced net sales this year to 1.8 million and in turn posted the 3rd straight day of growth. However, it should be noted that gold ETF holdings did register a 7 year high level with Bloomberg's story suggesting the new high was not only the result of the virus anxiety. In other words, the market could be seeing ongoing steady central bank buying which some suggest could keep up or extend its pace because of the need to diversify out of US dollar holdings.

In looking forward to today's trading session, the primary US scheduled data point will be the US pending home sales for December which are expected to be positive but at a slower pace than was seen in the prior month. On the other hand, the markets will probably be looking ahead to the afternoon US Federal Reserve policy decisions/statement. While the markets don't expect the US Fed to take any action, it is logical to assume that the Fed will be very proactive in promising support in the event that global economic headwinds from the virus require them to protect the US economy. Therefore Fed acknowledgment of the threat of slowing from the virus should be supportive of gold, as will be any promises of stimulus as that, in turn, could pressure the dollar. On the other hand, it is not a given that dovish talk from the Fed will undermine the dollar as the trade could continue to flow toward the dollar because of its confidence in the Fed's ability to manage/protect the US economy.

Fresnillo Plc. Overnight pegged their 2020 silver production to be in a range of 51 to 56 million ounces which compares to last year's production of 54.6 million ounces. It should be noted that Mexican silver production in 2019 was down 11.6% versus fiscal year 2018. Certainly, it would be premature to suggest that the virus has been contained on an international basis, and it might be illogical to assume that the crisis in China will come under control anytime soon. However, anxiety has been tamped down from assuring comments from both US and Chinese leadership and that could serve to thicken resistance in gold unless Chinese infection rates post more significant gains at the same time that the death rate increases notably.

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