I wouldn’t read a lot into the action in the gold market on Friday. It was just another day off the calendar…as Ted Butler would say. The only comment I would make is that the action in the gold price feels more like a top than a bottom.
Gold added about five bucks to its price from the time that trading began in the Far East Thursday…and the London a.m. gold fix. Then from there, it gave back seven dollars going into the p.m. gold fix…and after that, it gained over eight dollars until half past lunchtime in New York. Then a really serious seller showed up taking nine bucks off the price between then and the close of electronic trading in New York. It was pretty choppy trading all around…and it was obvious that every rally ran into serious resistance. The same could be said for silver.
It was a nothing kind of day yesterday. Both gold and silver got sold off at bit in the Hong Kong market late in their afternoon. This lasted until shortly after London opened. Then the prices just sat there until shortly before the London p.m. gold fix, when a N.Y. rally of sorts commenced in both, with neither metal going too far. Ted Butler pointed out to me that neither silver or gold got above their Monday highs…and that was probably the intent.
Gold declined gently throughout Far East and early European trading on Tuesday…and by shortly after lunchtime in London…had given up around four bucks. From there, a smallish rally developed that made an attempt to continue rallying on the Comex, but got cut off at the knees [at its high of the day] shortly after 9:10 a.m. Eastern time. This decline lasted until 1:15 p.m. in New York…and by the time electronic trading ended at 5:15 p.m. yesterday afternoon…gold was back to virtually unchanged from Monday’s close.
All was calm in Far East trading on Friday morning. Both metals began to slip a little starting at 3:00 p.m. on Friday afternoon in Hong Kong. This lasted through London trading as well…and by the time the Comex opened, gold was down $10 and silver had slid about 23 cents.
From the close of trading in New York on Wednesday afternoon at 5:15 Eastern Time…and the close of trading 24 hours later on Thursday at the same time…the U.S. dollar lost about 90 basis points. That’s a big drop. Gold’s response? Up three bucks…and silver was actually down on the day.
The high in gold on Wednesday turned out to be the Tuesday closing price of $924.10…as gold was under pressure right from the open in early Thursday morning trading in the Far East…as the New York bullion banks get about an hour head start before Sydney opens for business. This happened because the N.Y. bullion banks close for business at the end of one trading day…and open for business 45 minutes later for early morning trading in the Far East in the next calendar day. That 45 minute gap is the only time during the day that gold is not traded anywhere in the world. Note that on the Kitco gold chart below.
Gold didn’t do a lot in Far East trading on Tuesday. The low of the day occurred at the open in London…and for the next two hours, gold put on a spirited rally [$10+] that ended with the price going vertical about half an hour before the Comex open. However, as is always the case at moments like these, the usual not-for-profit sellers showed up and did their dirty until it was time for them to go for lunch at 12:00 noon in New York. Once ‘da boyz’ were at lunch, gold made a $7 run higher, which ended the second that floor trading was over on the Comex…and electronic trading began.
From the first paragraph of my Saturday commentary…”I don’t know what it is about that [one hour and change] stretch of time between the Sydney close and the London open…but if there is going to be a down day…it starts right there a large percentage of the time.” Any questions? Actually, both gold and silver got sold off the moment that the New York bullion banks opened for business 6:00 p.m. on Sunday night…which is very early Monday morning in Far East trading. Shortly before 3:00 p.m. in Hong Kong, gold had almost made it back to unchanged…and silver was actually up a couple of cents when the hammer fell. The bottom for gold came very shortly after the London…
Gold managed to add about three bucks to its price from the beginning of Wednesday morning trading in the Far East…right up until 1:00 p.m. in the London afternoon…which was 8:00 a.m. in New York. At that point, gold tacked on $8 in less than 30 minutes…sat there until lunchtime…then tacked on another $8 in less than 15 minutes. Then one of the usual not-for-profit sellers showed up and that was it for the day. Gold did manage to poke its nose above $940 again…and finally closed above the $940 mark at $940.30.