The gold market has caught a significant lift from chatter that it is in the midst of a rotational benefit from other instruments. In fact yesterday some fund managers indicating that stocks were overvalued and some allocation to gold should be made.
Overnight the bull camp added in speculation of rate cuts and excessive stimulation in China as reasons to pile into gold.
The investment quality gold storyline was given a further boost overnight by news yesterday that Swiss monthly exports of gold into Hong Kong jumped considerably despite the turmoil in that economic zone.
Obviously one of the most dominating forces lifting gold and silver prices today is the news that the Chinese virus count showed an uptick overnight. With reports of potential virus spread in the capital city of Beijing, some traders are moving into gold under the premise that China will now have a more serious problem outside the initial quarantine areas.
Certainly, safe-haven buying off the ongoing potential for an instant spike in anxiety from the coronavirus continues, but that influence is magnified by the idea that China will now throw everything it has to save growth.
Apparently, the gold market is interpreting vice Fed chairman comments yesterday into ideas that the Fed could cut rates before the end of the year. Adding further into the upward track in gold is the 22nd straight day of inflow into gold ETFs bringing this year's inflow to 2.5 million ounces.
Even the silver market is beginning to get lift with the March contract seemingly on a path to retest the January high up at $18.89.
In the end, we assume that the breakout/extension in gold and silver prices this week is going to create a follow-through wave of buying. The next upside target in gold is seen from $1660.
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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.
