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Identifying where the gold buying is coming from is essential as not all buying is equal.  

In strong hands such as central banks with a multi-generational view, the rally is 'high quality' and unlikely to be reversed, but with weak hands such as short term speculators, the opposite may be true. Two opposite outcomes.

And we are pretty confident we know who is behind the move...[LINK]

ZM Comment: The rise in gold, in the face of countervailing fundamentals has been vexing the market for several weeks now. Ross Norman offers an interesting theory on where the buying is coming from.

With the dollar this morning forging another higher high and reaching the highest level since early November, the currency impact on gold, silver, and copper remains negative.

Likewise, US treasury yields remain a burden with yields reaching the highest levels since last November with another higher high overnight.

While it is not clear what the direct ramifications are on gold prices, a precipitous decline in Chinese Consumer Price Index readings for March overnight suggests the Chinese economy is doing very poorly which could be a double-edged sword...[MORE]

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While gold has not managed a new all-time high this morning, both gold and silver markets remain just under this week's highs.

We suspect the downgrade of China provides a measure of flight to quality buying. However, China is also the largest consumer of gold, and the last mainland China gold import tally showed a month-over-month reduction of almost 50% and therefore the downgrade could injure classic physical gold demand expectations.

In a sign of volatility potential in the current market, the Shanghai Futures Exchange implemented trading limits on gold and copper starting Friday...[MORE]

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The overnight action is a good example of how the gold and silver trade is tracking its own course, as interest rates, currency, bitcoin, and energy prices are not giving off notable influences and yet gold and silver prices have surged again with gold posting another new all-time high.

Therefore, it is unlikely gold is tracking a classic safe harbor issue with a broad global origin.

In a slightly negative signal, both gold and silver ETF holdings declined yesterday, with the gold extraction of 299,047 ounces the largest single-day exodus in three months...[MORE]

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While the gold and silver markets exhibited significant two-sided volatility at the end of last week, the bull trend has clearly prevailed and is managing that action despite adversity from the dollar and interest rates.

However, a small portion of the upside impetus is likely the failed Middle East peace talks undertaken by Egypt.

It appears that gold and silver ETF holdings have started to climb with the flat price of gold in a potential beginning of the end of the rally...[MORE]

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