Gold Encounters Late Slide
May 6th, 2009 | By Doug Casey | Category: Gold MarketGold turned in a day of opposites on Monday after trading flat until just after Hong Kong closed, when it pushed sharply higher through the first hour of the New York session, peaking at $915, but then abruptly turned around and fell steadily through the rest of the Comex and the Globex, finishing at its intraday low of $895.90/oz., down $7.30. Overnight, gold is sharply higher.
Platinum fared better, rising from late Hong Kong trading into the New York session, then holding its gains in sideways action, ending at $1127, up $9. Overnight, platinum is little changed.
Silver followed much the same path as gold, peaking at the same time, at $13.57, but its decline was much less pronounced and it held its gains well enough to close at $13.32/oz., up 29 cents. Overnight, silver is trending higher. (Click here for charts)
The precious metals turned in a split decision yesterday, with silver holding well above the $13 mark and platinum above $1100, but gold sagging below $900, which it has been struggling to redefine as a support level, without much success.
There was not much buoyancy to be found among the usual suspects as equities zigzagged, oil slid and the dollar firmed up.
The Hightower Report noted silver’s success thusly: “Silver initially traded sharply higher as the market seemed to find both chart based buying support and demand interest inspired from a better macroeconomic outlook. Seeing improvements in US manufacturing, housing and consumer sentiment has improved traders sentiment in the silver market which lifted July silver to the highest price level in over a month. With Bernanke also seeing economic conditions improving, the prospects for a pick up in industrial metals demand seemed to provide silver with stronger price support than gold. In fact, the silver market was able to hold onto a good portion of the day’s gains despite the recovery in the Dollar and a sharp break in copper and that may suggest the fundamentals supporting the silver market could be a bit stronger than gold’s.”
Was gold’s recent rally unsustainable?
In the opinion of technician James Moore, of TheBullionDesk.com, “gold is still struggling to conquer trend-line resistance, and, with momentum indicators showing signs of stalling, the metal remains at risk of testing back to the $865 area.”
Also helping to dampen gold’s performance yesterday were words from Fed Chairman Ben Bernanke, who proclaimed that the U.S. economy is bottoming out and will turn up later this year. Inflation will remain low, Bernanke testified to Congress, and if true, that would be gold negative.
Source: Gold Encounters Late Slide
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.