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We expect gold and silver to continue to chop roughly in line with yesterday's price action until the first of two significant US inflation reports is released tomorrow.

However, bullish fundamental information justifies silver's recent relative strength versus gold as reports of heavy Chinese buying of international silver (because domestic prices are significantly higher) suggest a major demand source has emerged.

The bullish theme behind significant Chinese interest is the surging demand for silver in solar energy applications. Along those lines Shanghai spot silver prices last week were 2% above the 13% Chinese import tax or 15% above international silver prices...[MORE]

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While gold and silver are tracking higher early today the charts still favor the bear camp from last week's sharp range-down failures which in turn should make the Thursday/Friday lows key pivot point pricing to start the new trading week.

Key pivot point pricing in June gold begins at $2328.10 and at $30.265 in July silver.

Adding to the negative track in gold and silver prices early today is news that Chinese April net gold imports plunged 38% from March which we think was largely the result of historically high pricing...[MORE]

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Good morning. The precious metals are lower in early U.S. trading.

U.S. calendar features Case-Shiller Home Price Index, FHFA Home Price Index, Consumer Confidence, Dallas Fed Index, M2.

FedSpeak due from Mester, Bowman, & Kashkari.

What goes up aggressively and makes a chain of new record highs holds the prospect of aggressive corrective action. In fact, if gold finishes the week at current levels, it will have dropped the most in a single week since last October!

In retrospect, the pendulum shift on US interest rate policy back toward the hawks, combined with a higher high in the dollar and a pulse higher in treasury yields, provides a bearish environment for gold and silver into the end of the week.

However, if recent gains were partially the result of flight to quality issues, we suspect some bargain-hunting buying will surface before the close today, but perhaps after additional declines...[MORE]

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Gold has plunged more than 4% from Monday's record high at $2449.34. The yellow metal fell $42.57 on Wednesday and is off another $35 today.

 

Silver has tumbled nearly 7% from Tuesday's 11-year high at $32.38!

Losses are mounting as markets unwind rate cut expectations in the wake of Wednesday's release of the minutes from the last FOMC meeting.

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While the declines yesterday in gold and silver were blamed on fear of hawkish statements from the last Fed meeting minutes, the declines this morning are the result of a realization of hawkish news from the actual release.

Apparently, the Fed had a debate on whether policy was tight enough to bring inflation down as quickly as was hoped for and some policymakers were disappointed in the economic information they have seen since the March meeting.

Therefore, a minimal higher high for the move in the US dollar adds to the liquidation bias in markets that were significantly overdone into the recent highs...[MORE]

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While today could be a very critical pivot point for gold from a macroeconomic perspective, (US Fed meeting minutes release, 20-year US treasury bond auction, and existing home sales) it should be noted that internal fundamentals remain generally positive.

In fact, gold ETF holdings have now risen for six straight days and silver ETF holdings yesterday jumped by a notable 2.8 million ounces.

In a minimal and perhaps temporary negative development, gold saw a forecast overnight from Commerzbank suggesting gold prices will fall back to $2300 in the second half of this year. Countervailing the bearish $2300 price projection by Commerzbank is a forecast from Morgan Stanley of a target of $2760 an ounce...[MORE]

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PG Comment: I wouldn't consider a retreat to $2300 bearish. That's just 4.6% below the current price. Now if we go the $2760 first...that's another story.