Early Tuesday morning trading in the Far East looked virtually the same as it did on Monday for gold. But once the Comex opened (minutes before, actually) gold got absolutely hammered.

Don’t mistake the U.S. dollar’s recent rally for strength. If anything, it’s a head fake of legendary proportions. In fact, the dollar’s recent run-up is actually a warning that risks are escalating.

Is the U.S. Fed done cutting rates? The commodities market seems to think so. Gold, platinum, palladium and silver all fell by the end of New York trading. Even oil was off its all-time highs though still above US$115.

Well, as I suspected, it doesn’t look like the Bank of England’s £50bn injection is going to bring down mortgage rates any time soon.

They showed up in Comex trading shortly after London opened…about 4:00 a.m. New York time. At first it was only a persistent decline, but shortly before the New York traders showed up it intensified…with the boys in New York gleefully helping out once trading began there.

Gold held steady at around $945 in the far East, but started down once London opened, and continued to plummet through the first hour of the New York session on Friday, falling as low as $905 before turning north for the balance of the day and finishing at $916.20, down $18.10. For the week, gold lost 1.3%.

The news that the London Interbank Offer Rate (LIBOR) system of setting interest rates is running into trouble was surprising at first glance.