Gold, which was up a bit in the far East, plummeted from $910 to $889 once London opened, but from there it forged higher through the New York trading day, to finish at $899.90/oz., down $4.40. Overnight, gold has continued to decline.

Platinum also tried to recover its European losses during the New York day, but fared less well than gold, ending at $2069/oz., down $46. Overnight, platinum is sharply lower.

Silver tracked gold very closely, but staged a more impressive rally in New York that carried it nearly back into the black for a close at $17.41/oz., down a penny. Overnight, silver has fallen further.
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A pretty lackluster day for the precious metals, especially considering that rising oil prices were there for support. But traders obviously felt that a modest advance for the dollar was of greater importance.

That the metals also came well off their lows was also encouraging, but the relationship between gold and crude continues to be double-edged as oil acts both to support the gold price and to cap it.

As Kitco’s Jon Nadler wrote: “Gold remains on the defensive for the moment, as it is lacking core fabrication demand and more attention from investors … The latter continue to be attracted to oil like insects on a May evening.”

Nevertheless, that is a reversible phenomenon, according to Mark O’Byrne, of Gold and Silver Investments Ltd.

O’Byrne writes that “gold is likely to outperform oil in the medium to long term … Strong physical demand internationally is likely to cushion the sell-off and result in gold finding strong support again between $850 and $870.”

But Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois, makes the pessimists’ case, saying that “inflationary expectations are too high and the Fed can’t live with this. Interest rates are going to be rising and everyone will get out of commodities.”

Whether gold must fall with rising interest rates remains to be seen, but futures traders are increasingly betting on that rise, with the market showing a 43% chance the Fed will raise borrowing costs to 2.25% by December 16, compared with a 38% chance a week ago.

Source: Gold, Platinum Slide