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Mr. Gartman's shift and decision have sparked a storm of words in various gold forums some of them angry words but, curiously, they appear to be coming from some of the same quarters that have previously lavished praised upon Mr. Gartman when he was unabashedly bullish on the metal. With some 35 countries around the globe practically on the verge of food riots engendered by rising prices, Mr. Gartman is entirely justified in expecting some sort of an official intervention into the grain markets. The better question is, how long before oil and currencies also become the targets of restrictive action in order to avert a slide into a global sized economic cave in.While gold could well be, and will quite likely remain, immune from such manipulation (Behold! I have used the word!) some metallic headgear wearing associations will not view its potential decline in tandem with other commodities in the same way.

Gold is still a religion for many, no doubt. Therefore, you are either with them, or against them. No room for honest trading decisions and level headed advice. To the point that one can even attempt to deny the existence of official stocks. BTW, no one says that gold is not money and that it cannot be looked at as an alternative currency holding. It is, and it should be. The point is, it is not only a currency. It is also a commodity. And, at the end of the day, any and all currencies do go through cycles of strength and weakness. There is no rule book known that say that gold's price pattern is a strictly one way street.

Thus, Mineweb's Lawrence Williams asks :Are we going to see another upwards push, a further fall back, or a steadying period?

and goes on to explain that:

While gold has tended to move with the strength of the US dollar, the correlation is far from an absolute one with many other financial and supply/demand factors coming into play as the price rises or falls. At the moment it seems that rising prices affect the jewellery market quite substantially and perceived peaks bring out investment profit taking. Conversely, as the price falls back towards the $900 level, both sales into the jewellery sector and investor hands have tended to come in to support the price.

The investment side of the market has been seeing some changes with smaller institutions entering the gold investment fray and a corresponding increase in the number of contracts, but at a lower volume, coming into play. To an extent this can make the whole sector much more volatile as these smaller institutions are perhaps less likely to be long term gold investors, but short term opportunists trading in and out on perceived peaks and troughs.

Range trading is seen until fresh economic statistics provide fuel for decisions. Selling into strength still seen as the order of the day and tests of wider price points (lower as well as higher) could materialize. All eyes on oil overnight.

Jon Nadler is a Senior Analyst with Kitco Bullion Dealers Montreal