The congestive pattern in gold continued to frustrate players overnight, as the metal saw but a six dollar range despite a slippage in the US dollar to its lows for the year on the trade-weighted index. The greenback also traded at two-month lows against the euro, and is making the forecasts calling for a 1.46 target against the common currency looking more like they came from the Amazing Kreskin, with each passing day.
In any case, not having gold at $1050 at a time when the greenback is scraping the floor of 2009's index levels, is...not too good. We are having to lean with the projections that call for a possible $100 break in the gold price following this rubber-band congestion and the metal's inability to sail smoothly higher. But, hey we've been wrong before.
Crude oil prices drifted lower overnight as well, but the losses were initially so minor that they were almost not worth mentioning. Black gold is still practically at $68 a barrel, and we (as others) are still looking for a rational explanation as to this value equation. For now, let's call it: go figure.
New York bullion dealings started the Tuesday session with a 0.45% loss in gold, which was quoted at $949.00 per ounce against the 78.58 mark that the dollar had recovered to, on the index, and against lowered expectations of advances in equities as the trading day prepared to get underway.
In fact, reports that insiders have ramped up the level of their sales of shares to a level not seen since the toppy days of late 2007. Ominous omen, or odd observation? European shares were already seen as being at risk of truncating their recent winning run.
Silver dropped a nickel on the open, quoted at $13.96 an ounce, while platinum gave back only a tiny portion of yesterday's overeager gains by falling $1 to $1215 per ounce. There was no change reported in palladium, as it began the day stalled at $260 per ounce. Base metals continued to party this morning, with aluminium leading the way following a 1.7% gain. This is the white metal's longest gain in about 22 years. Here, bully, bully.
Elsewhere, Lithuania reported a 22.4% (!) drop in its annual GDP -making whatever will come out data-wise from the US (expectations of 2.4% on the negative side) later this week, like Chinese-style growth. Or, consider the 23.6% unemployment rate seen in S. Africa before attaching any label to the near-10% rate of joblessness the US is experiencing.
Speaking of the Chinese, Mr. Geithner firmly reassured them yesterday, as regards the US' intent to shrink its budget deficits. This, in order that the Chinese delegation can return home without having to pop any anti-anxiety medication when looking at their $800 billion-plus balance sheet.
As far as growing anxieties are concerned, the impending curbs on commodities positions, their nature, size, etc. has the folks at Goldman fighting the regulators with some big ammo. Whatever the outcome, the new patterns of commodity trading will undoubtedly put a significant dent in the carefree world of commodity-oriented ETFs. Can you say: shrinkage?
Keep an eye on this 'recession is easing' type of talk. Keep two eyes on Treasury auctions. Keep your hands in your pockets as gold possibly breaks for lower ground. Also keep an eye on the Spanish Inquisition. Nobody expects it. Except those who are reportedly responsible for last year's mushroom cloud in the crude oil market. They will be given...the rack.
Have a Wonderful Tuesday.