Gold started falling as soon as London opened on Monday, and continued down into the first hour of New York trading, hitting its low for the day at $845, then rallied, sold off to the noon hour, and rallied again through the rest of the Comex and the Globex, finishing at $858.30/oz., down $26.60 from Friday. Overnight, gold is sharply lower.

Platinum dropped to its intraday low of $915 early in New York, then staged a strong rally that carried it nearly to $950 before it eased late in the day to end at $943/oz., up $3. Overnight, platinum is slightly lower.

Silver greeted the new year by following gold, albeit with sharper declines and stronger rallies, all of which left it with a close in the red at $11.22/oz., down 31 cents. Overnight, silver has fallen off.  (Click here for charts)

Although platinum held steady, gold and silver began 2009 with a resounding thud. Soaring oil prices did lend some support, but were unable to counter the effect of a sharply rising dollar. Equities that dropped off after three straight sessions of gains didn’t help, either.

The Hightower Report wrote of the day’s action: “In its recent pattern February gold forged an aggressive early washout and then fought its way out from under the selling tide. While prices generally remained ultra weak throughout the trading session, at times February gold had managed to bounce by as much as $18 an ounce off the early lows. Clearly the ultra strong US Dollar was a major negative for gold during the Monday trade but one also got the feeling that gold was also seeing flight to quality long liquidation. Since the stock market wasn’t definitively higher throughout the trading session Monday, it seems a little suspect to suggest that improved macro economic psychology was present in the marketplace.”

UBS analyst John Reade wrote that, in his opinion, gold may trade back to the $800 level in the next one to three months.

“Unless the dollar remains weak, gold could succumb to some profit-taking,” Reade said. “Any short- term traders who caught the recent move higher should take profits here.”

Meanwhile, analyst Dan Norcini, writing on jsmineset.com, chipped in with a technician’s viewpoint, saying that: “Support near the $850 level gave way early in [yester]day’s session before buying showed up in sufficient size to push the market away from that zone. This initial support did hold but barely. The next level of support, should $850 give way, and one that gold must hold in order to keep the technicals friendly, is the $830 level. Two consecutive closes below that level and a short term top will be in (at least for gold priced in Dollar terms). Resistance still lies at the very stubborn $880 level. It is obvious that a seller/sellers of size are making a stand there.”

Source: Gold Stumbles Out Of The Block In 2009