With 3.7 tonnes of sales reported by ECB banks this past week, it looks like the ECB umbrella organization sales of 37 tonnes still have yet to show up in the weekly reports, but that the general sales trend from ECB member banks is finally scaling back with two consecutive weeks of sales less than 4 tonnes.  These reduced sales follow three months of sales where the market had to digest 170 tonnes.  Two weeks does not a trend make, but seeing average sales totals of 2.75 tonnes versus the past three months of weekly sales averaging 14.5 tonnes, it looks like the central bank supply is moving back to the sidelines as we enter the summer months.  This is the equivalent change of over 375,000 ounces in supply no longer hitting the market via central bank sales each week.

We believe that this trend of lower sales will continue to hold over the coming months.  At the same time these increased sales are peeling off the market, the South African labor union and mining company talks are heating up.  With each passing day the largest gold mining country is heading closer to production going offline.  The drop date for the labor contract is June 30th.  If central bank sales and the country delivering the largest mine supply dry up a the same time, it won't matter what oil prices are doing, or where the dollar is trading, prices will head higher.

Precious metals prices should be stuck in the mud until we get a number of US economic reports starting Wednesday.  The markets will get the CPI, PPI, retail sales, industrial production and capacity utilization figures, amongst others, in the next three days.  This Wednesday forward has the potential to be extremely volatile, whipsawing investors back and forth as each report hits the wires.