It is becoming increasingly difficult to project market action even a few hours into the future, with the number of countries reporting virus infections spreading to almost every continent and some areas like South Korea seeing notable increases in deaths.

However, the market did see signs of the virus promoting sales of precious metals coins, which smacks of anxiety-driven safe haven speculation. It should also be noted that gold ETF holdings have returned to record levels, in excess of 3,016 tonnes, with some reports indicating the inflows to date in February have already surpassed the inflows for the entire month of January.

In our opinion, the small investors/bag holders have not fully moved into position yet, even though it is likely that the COT positioning adjusted for this week's rally will register another new record net long for speculators. For a fully bought-out condition in the small investor category, we would probably need to see daily ETF inflows on the order of 5 or 6 million ounces per day.

Fortunately for the bull camp, the dollar seems to have lost its edge over other currencies, and a resumption of the downward track in global equity markets today could bring gold back to the February highs fairly quickly.

It is possible that the violent religious/ethnic clashes in New Delhi could temper retail gold demand in India but could ultimately result in safe-haven buying if the situation becomes a threat to economic stability.

A normal retracement bounce of the recent washout could easily allow for a retest of $1,666 in April gold, with critical support now seen at this week's quasi-double low of $1,626.60.

Even if it appears that a vaccine shows significant promise, the ongoing threat of slowing will likely keep central banks around the globe in an easing posture and therefore leave gold with a bullish longer-term environment.

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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.