Gold and silver gapped higher overnight on news of a spike in coronavirus cases in Italy, and they continued to make gains during the session. Gold has traded to its highest levels since January 2013 and silver to its highest since September.

Even prior to this move, the markets had begun putting significant safe haven premium into prices. Foremost in the market's mind this week is the virus, and how much it will affect China and the rest of the world's economy.

A second and perhaps more sustainable bull argument for gold is the idea that China will use every monetary and fiscal tool it can get ahold of to support their economy and that other central banks (perhaps even the US) will take preemptive action and pump-up liquidity.

It also appears that gold is getting "rotational investment" in what could be the most credible example of it a decade.

On the other hand, roughly $150 has been injected into the market on the expectations of the aforementioned bull forces, and some progression toward those outcomes will be needed to avoid significant two-sided volatility.

Adding to that potential is the fact Friday's Commitments of Traders report showed a large spec and fund net long position as of last Tuesday and that gold prices have rallied another $80 since the data was collected. The report showed managed money traders were net buyers of 54,837 contracts of gold for the week, increasing their net long to 284,206. Non-commercial & non-reportable traders combined were net buyers of 63,390, increasing their net long to 421,664, which is a new record.

In silver, managed money traders were net buyers of 12,432 contracts, increasing their net long to 68,443. Non-commercial & non-reportable traders were net buyers of 10,994, increasing their net long to 104,508, which is approaching the all-time high of 118,943 from April 2017.

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