You say yes, I say no / I say high, you say low

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Gold prices spent the day in a range of from $915 to $932 but ended with the August contract marginally lower and with spot prices orbiting the $925 area at last check this afternoon. The gold ETF lost nearly 17 tonnes of metal in yesterday's massive commodity sell off and more than 32 tonnes *5% of its balances) over the past two declining session in gold. The global jewelry market experienced a 21% decline in demand in the first quarter, as compared to 2007. The 445 tonne number tallied by the World Gold Council represents the lowest level of bauble demand since 1993. Just try to tell us that India is irrelevant anymore...The Council certainly does not think so (see yesterday's changing gold ad campaign story).

Although oil firmed by over $1, it was still hovering only near $125.50 - nowhere near its peak seen last week. Crude prices were also seen as being mildly supported by renewed hawkish militaristic-flavored statement coming from Israel on the topic of Iranian nuclear development. In background news, it was reported by the BBC that a USGS survey concludes that the Arctic holds about 90 billion barrels of oil - a figure that matches Russia's entire known reserves. Contemplate that.

All of this unfolded while the dollar gained to 1.564 against the euro and was scaling 72.90 on the index. The euro stepped into a small sinkhole overnight as German business confidence revisited levels not seen since the events of 9/11. Over in the US, grand juries are beginning work on dissecting the possible former goings-on at Countrywide and IndyMac. Better don protective breathing apparatus when those files are perused...

New York spot gold prices picked up $3.70 on the open to trade at $925.90 as participants anticipated weak existing June home sales data and initial jobless claims figures. The latter will be taken with the proverbial grain of salt as July is historically not an easy month during which to tally claims on a reliable basis due to automobile plant retooling-related closures ahead of the new model year. Gold remains on the defensive following the shift in sentiment after the start of this week.

The $915 area remains a support zone that must hold lest the metal next tries to find buyers under $900 per ounce. Similarly, the $945 to $965 area must once again be overcome in order to restore derailed confidence in the bull track headed to $1K. Silver was off 7 cents at $17.29 while platinum continued lower, losing $28 at $1704. Palladium rebounded by $2 to $383 per ounce. The automobile saga continues to churn the noble metals markets. Ford bled nearly $9 billion, Daimler dramatically cut estimates, Renault is reducing work shifts, and GM slipped behind Toyota on a global sales basis. Times, they are a-changin' indeed..

Although the Dow lost 228 points on the day, there are additional signs that speculative money is in full hunt mode for bargains in the equity sector and keeps lightening up on 'stuff." Further musings on the apparent sector rotation and cycle change are this afternoon's focus story. They are brought to you by Marketwatch and by MPTrader.com's Mike Paulenoff:

"Goodbye Commodities, Hello Financials"

It seemed as though there was no place to hide when Apple and the technology sector, along with Bank of America and the financials, got clobbered with the rest of the market at Tuesday's open. Though by mid-day, the market did recover in a big way and left behind another significant low within a "rolling bottoming process."

Tuesday's action in the Standard & Poors S&P 500 index established a low of 1248 and high of 1277. That dwarfed Monday's daily range, closing well above Monday's close and high, so from a strict technical prospective the blue chip index had a key upside reversal. In addition, unlike the rally off of last week's July 15 low, Tuesday's rally did not have the feel of a temporary oversold rally. The morning sell-off wasn't as dramatic, with the S&P 500 only down 11.5 points from its previous close as opposed to nearly 28 points on July 15. So it was a higher, secondary low -- more corrective looking than that of the previous week, and less susceptible to a mere reactive bounce.

Driving the S&P 500, which has now recovered 6.8% from its July 15 low (through Wednesday's close at 1282), are the financials, which have room to go higher. Over the last several months the percentage that the financials make up of the S&P 500 has diminished just by virtue of the price deterioration, while the energy sector percentage of the index has increased. But institutions in the last week, in particular, appear to have begun to shift their money out of the once high-flying energy sector into equities.

In addition, the streetTRACKS Gold Shares GLD looked like it was on its way to retest high levels at around 98 early Tuesday but instead ran out of gas at around 96.20 in the pre-market hours and then reversed in a big way and closed at 93, falling to 90.57 as of Wednesday's close. Chances are the GLD now will move back to below 90, and possibly towards a full-fledged test of its rising 200-DMA, now at 86.80, which must contain any further sustained weakness to avert a total breakdown in gold prices towards $800 ($80 in the GLD).