While the declines in the gold market this morning are not significant, the April contract did forge a 3 day low off a 2nd straight day of falling Chinese virus infection rates. While it should be noted that there is debate among experts on whether a peak has been achieved in the coronavirus spread the World Health Organization continues to warn that the international outbreak threat might be just beginning.

In fact, the World Health Organization chief overnight indicated the world needs to "wake up and consider this virus as public enemy number one".

Unfortunately for the bull camp, overnight press coverage from China has predicted a noted slump in Chinese gold jewelry demand. While the gold market doesn't appear to be benefiting from economic uncertainty news this week, eurozone industrial production for December released this morning declined by a large 4.1% relative to year-ago levels and the trade was presented with the lowest JOLTS reading in 2 years yesterday and therefore macroeconomic uncertainty will likely remain in the equation until it is clear that global infections from the virus are slowing to a trickle.

Fortunately for gold bulls, the dollar remains near yesterday's lows and would appear to be vulnerable to additional weakness this morning.

Cushioning the gold market is news that gold ETF holdings expanded for the 15th straight day with this year's to date purchases 1.89 million ounces. Silver ETFs also added 143,780 ounces of silver bringing their net purchases up to 3.2 million ounces for the year.

As we were quoted on Bloomberg on Tuesday, we expect the $30 rally in gold from last week's low to be removed as the trade moves to factor in a downshift in the coronavirus crisis.

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