The precious metals snapped their long losing streaks as oil moved higher and the dollar stalled against the euro.  The Hightower Report summarized the day’s action in somewhat less than enthusiastic terms, thusly: “Seeing the gold market rebound in the face of residual Dollar strength had to frustrate some of the bears.

However, a sharp rise in energy and grain prices seemed to vastly improve the macro economic outlook toward physical commodity prices, which seem to have survived the 8th major ‘end of the bull market’ call for the year. Certainly seeing the potential for geopolitical escalation of the Russia/Georgia situation is cause for some flight to quality buying interest and certainly seeing the US stock market under aggressive pressure added to that angle, but in the end seeing big gains in several unrelated markets has to favor the bull camp.”

Perhaps more important is that investors are likely coming to the conclusion that the selloff has been overdone.

As Stephen Platt, a commodity analyst at Archer Financial Services in Chicago, put it, “The market has had an extended decline and it’s certainly due for a rally … You’re starting to see physical demand evolve. There’s an easing up on the selling pressure around the $800 level.”

Mark O’Byrne, of Gold and Silver Investments Ltd., was even blunter, writing that, “The vicious sell-off has resulted in gold now being massively oversold … While bottom calling is a dangerous pursuit and the old market adage to ‘never catch a falling knife’ remains appropriate, value investors and bargain hunters with longer-term horizons are likely to be strong buyers at these very depressed levels.”

And oil may be re-emerging as a market mover. The precious metals and crude markets “look like they’re trading higher … in anticipation of a rally in the euro and a short-term decline in the dollar,” said Dale Doelling, chief market technician at Trends In Commodities.

“Anyone holding long positions in gold and oil will probably get an opportunity to cover at higher prices over the next several trading sessions,” Doelling wrote.

Source: Precious Metals Finally Rally, Growing Perception They May have Been Oversold