Silver broke support at $16.80/ounce, warning of another decline. Declining Trend Index peaks indicate selling pressure.
Gold has yet to break support at $1450 but is likely to follow Silver if Treasury yields rise.
Higher Treasury yields weaken demand for Gold; it increases the opportunity cost of holding precious metals with no yield. Rising Trend Index troughs warn of upward pressure on yields. Expect another test of resistance at 2.0%.
A weakening Yuan (in USD) signals higher USD reserves held by the PBOC — and increased Treasury holdings (driving yields lower). Expect another test of primary support at 14 US cents.
China opted for a largely symbolic response to President Trump’s signing of the Hong Kong Human Rights and Democracy Act. Increased sanctions against foreign NGOs are lame, according to Trivium China:
Foreign NGOs, especially those dedicated to democracy and human rights, have virtually no latitude to operate in China as it is. Additional “sanctions” are basically meaningless.
The weak response elicited a further push from Trump:
“In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right,” Trump told reporters in London. [CNBC]
The US is set to impose further tariffs if the December 15 deadline is not met. Commerce Secretary Wilbur Ross suggested that waiting until after the 2020 election to reach a trade deal with China would take away some of Beijing’s leverage, adding that “no high-level discussions are scheduled before the Dec. 15 deadline.”
We can’t see the US caving in to Beijing’s demands to roll back existing tariffs, nor the CCP kow-towing to Trump. Expect further delays.
Australia
Australia’s All Ordinaries Gold Index is testing support at 6500. Breach would signal continuation of the downward trend channel. Breakout from the trend channel is unlikely but would warn that a bottom is forming.
Patience
Gold remains in a long-term up-trend. The current correction may offer an attractive entry point but we need confirmation that the up-trend is intact.