As observed in yesterday's closing commentary, gold prices looked poised for a sub-$900 dip amid an eroding commodity complex. Well, the metal followed through on that tilt and fell to a low of $888.00 overnight in Asian trading. Crude oil prices fell to just under $101 while the US dollar bounced above 72.20 on the index - a combination that proved highly adverse to bullion making further progress to the upside. Thus, the latest false start attempt towards $950 fell apart yesterday and now the compass is pointing towards $875 and possibly $845 per ounce.
New York gold opened near a two-month low, losing $17 at $898.70 per ounce as fresh selling waves hit the pits and participants remained on dollar-watch. Some hope that poor ISM figures may dent the greenback's ascent against the euro later today were keeping the metal above its overnight lows, but sentiment will sour quickly should we get a close beneath the $900 round figure today. Silver took it on the chin this morning as well, losing 36 cents to $16.85 as concerns about waning industrial demand hit copper and other metals and the dollar's new-found vigor -even if temporary- put pressure on commodities as an asset class. Platinum lost 50 to $1956 and palladium fell $5 to $436.00 per ounce.
In the interim, more trouble (this time real, unlike the silver 'issue') hit European banks this morning.
Forbes reports that:
With struggling Swiss bank UBS taking up a large share of the spotlight Tuesday, Germany's Deutsche Bank picked a relatively good time to announce record write-downs on its loan portfolio. The bank said Tuesday that it expected to take write-downs of 2.5 billion euros ($3.9 billion) in the first quarter, a figure higher than its write-downs for all of 2007.
Meanwhile, the NY times writes that: UBS, the largest Swiss bank, said on Tuesday that it would write down another $19 billion related to U.S. real estate and related structured credit positions and said Marcel Ospel, its chairman, would step down.
Look for more of the same as the day wears on. Perceptions that the credit crisis is ebbing will remain pitted against fears that the worst banking crisis in 30 years will drag the global economy down. Safe-have gold buyers will be pitted against risk-averse speculators who see a slowing economy as valid reason to park funds in others assets. Closing levels will be more telling.