Gold pushed higher in the overseas markets, peaking near $740 in mid-London trading, but hit the skids at that point, dropping nearly $15 by the second hour in New York, then was flat through the Comex, before finally tailing off again during the Globex to finish at $722.00, down $1.70 from Friday. Overnight, gold has pushed higher.

Platinum also fell off steeply from its European highs, and traded within a tight $10 range through the New York day, ending at $812/oz., down $7. Overnight, platinum has edged higher.

Silver soared in Hong Kong, rising as high as $10.20, but that was it as it dropped off sharply, falling below break-even late in the Comex and coming to rest in the Globex at $9.79/oz., down 7 cents. Overnight, silver is trending higher. (Click here for charts)

It was a very lackluster day for the precious metals yesterday, as early rallies in all of them got snuffed out, leading to minor losses across the board.

Gold got no help from the usual suspects, as the dollar continued its latest advance against the euro, and oil prices sank.

One positive note was sounded by Matt Zeman, a metals trader at LaSalle Futures Group in Chicago, who said that, “Gold took a very steep drop last month, so [we’re due for a] gold bounce on a technical basis.”

Zeman added that, “The dollar has strengthened so much in the past eight weeks that it’s just overdone … There are some buying opportunities here.” And he doesn’t mean in the buck.

As this is a fair and balanced presentation, we should note that at the other (far) end of the spectrum we find über-pessimist Jon Nadler of Kitco, who wrote that: “Investors should sell into rallies and only accumulate at $675, $640, $580, and $540 if those targets are reached … Gold lost some of its safe-haven attributes in this last crisis. Liquidations and deflation are alive and well.”

We agree that liquidations and deflation are alive and well, but they are temporary. Deleveraging will eventually end, and the truly staggering inflation in the monetary base over the past couple of weeks will overwhelm deflation. It is a matter of when, not if.

Overall, as Mark O’Byrne of Gold and Silver Investments notes, the recent rally in mining shares is significant, with the Amex Gold Bugs Index up 15% last week. O’Byrne sees this as “an indication that we are at or near a low in this sell-off,” as the stock indexes “tend to be a leading indicator of a trend reversal in the precious metals.”

Source: Precious metals tread water -  Early rallies snuffed out