The last 12 hours proves the treacherous nature of trade in the face of the ebb and flow of the virus crisis. While some of the huge jump in the virus count might be attributable to revised measurement methods, there is no doubt that the absolute number threw markets into a fresh risk-off mode.
However, seeing the death rate jump sharply is not directly impacted by measurement criterion and serves to recapture international attention. The reported jump in cases on Wednesday alone was pegged at 14,840 with Chinese officials indicating that quicker computerized CT scans would allow them to speed up the process of determining who is infected.
Previously infection tests took up to 2 days to register results thereby forcing the government to maintain surveillance over more people than necessary. Therefore a measure of uncertainty has been rekindled with the trade likely to price in sharp infection spread rates again later today. It does appear as if China has some form of end of day count that looks to be released in the late afternoon (US trading hours).
Not surprisingly gold ETF holdings increased yesterday for the 16th straight session with year today purchases approaching 2 million ounces. Silver ETF's also added 1.1 million ounces bringing net purchases this year 24.3 million ounces. However it should be noted that the interest in gold and silver ETFs have not received much coverage in the financial press, but overnight analysts made note of the fact that money has continued to flow into the risk-off instruments despite new all-time record highs in equities!
Adding into the sudden bullish shift in market conditions for gold and silver is the fact that the dollar has weakened this morning despite the return to safe-haven interest. In fact, the dollar could provide more specific lift to gold in the event it falls back below 98.71.
Developments that might facilitate the dollar slide and a further gold rally would be a notably softer than expected US CPI reading and or a big jump in US initial claims.
Minimally negative overnight stories flowed from Gold Fields as they recorded a 2019 production gain of nearly 8%, they projected a 40,000 ounce 2020 production gain over 2019 and then they announced they would spend $252 million to start a new gold mine in Chile.
Yet another minor negative that might be limiting of the upward bias is news that South African December gold production broke a five-month streak of gold declines with a 24% monthly gain.
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