|
Good Morning,
Gold's three-week old string of losses (the longest in one year's time) did not appear to show many signs of coming to an end as some overseas markets returned from the May Day hiatus to find a badly bruised metal trying to swim against a rising dollar and against a liquidation syndrome in many another commodity. A convincing break under the 1980 high of $845 may usher in further nervous sales in lieu of the bargain hunting one would hope to have emerge at this juncture. Several analyses written since yesterday allude to a possibility that the precious metal may dip beyond its 200-day moving average of $822 and fall to $780, $750 or the $700 to $732 level from which its meteoric rise began last September.
New York spot trading opened with a mild $1.50 gain at $853.40 per ounce bid, as participants prepared to square books ahead of the weekend and as one last hope for an attempt at a rally for the week was being pinned on the nonfarm jobs data being released this morning. Alas, the loss of only 20,000 jobs for the past month (versus expectations of as many as 80,000) and a decline in unemployment to 5% was the straw that broke the golden camel's back today.
The better than expected data swiftly knocked gold down toward the $840's and set it up for another day of declines. Silver rose 11 cents on the open, to $16.26 but the noble metals continued their descent, with platinum losing $19 to $1846 and palladium dropping $4 to $405 per ounce. Whatever type this recession ends up being, it looks like it has a fairly shallow profile in its initial stages. The dollar surged .40 to 73.60 on the index following the unemployment report, while crude oil continued near $113 per barrel following Turkish attacks on Kurdish positions inside Iraq.
VM Group London today issued a projection for an extremely wide trading range over the next 18 month, of from $700 to $1300 - but the latter is predicated on a catastrophic aggravation of the credit crisis. Much, therefore, depends on the glass half-full/half-empty perspective that investors might adopt with regard to that issue. Thus far, since the Bear rescue, that outlook has been quite obvious, as the bets indicate expectations that the sky will remain in place.
The doom and gloom clubs on the other hand, will keep rooting for a violent death of the dollar, and an implosion of the global financial system and preach with certainty that the end is near (just as they did in 1980, 1987, and 1999). Further, all kinds of price suppression theories will once again be floated to explain gold's fall from grace as if its speculation-driven rise was a result of a call to arms to the masses by the inventors of same. You see, gold was somehow 'permitted' to rise to $1034 by the same nefarious forces that are "bashing" it now. In order to wipe your wealth out. Makes sense. In a parallel universe, perhaps.
We still expect a bit of stabilization and mild recovery as well as some better Indian offtake over the next four/five days but conditions remain fragile and trigger fingers nervous. Watch that $845 figure.
Happy Trading.
Jon Nadler
Senior Analyst
Kitco Bullion Dealers Montreal
****
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
|
