Gold turns lower amid profit taking

Good Morning,

Mild profit-taking became manifest this morning and thus gold prices and other precious metals prices turned slightly lower upon the New York session’s opening. Spot bullion opened unchanged-to-slightly-lower, very near the $1225.00 level it finished at on Tuesday afternoon. Later in the session, the market sold off a bit further drawing closer to the $1220.00 price level.

At this juncture, the Wednesday morning decline could end up representing the largest retracement in prices in about three weeks. Unless, of course, the spec funds make yet another valiant- and this time, successful- attempt to overcome the $1230.00 level later today, or in the week. Not a possibility to be dismissed, at all. Managing Director Pratik Sharma of Atyant Capital opined in a video segment that the gold trade is still rather “crowded” (with the likes of Paulson and Mindich) despite a recent (Q2) small exit by billionaire investor George Soros.

Spot silver prices started the midweek session off by losing one dime per ounce, quoted at $18.43 bid. Platinum and palladium slipped a bit, with the former losing $4 to open at $1,535.00 and the latter dropping $8 to start at $486.00 the ounce. Once again, no change was reported in rhodium, trading at $2,070.00 per troy ounce on the bid-side. The Dow fell about 50 points this morning, pressured by rather underwhelming results posted by Target and by Deere.

In the background, crude oil was edging closer to $75.00 per barrel, following bearish stockpile statistics issued by the API. The US dollar was off marginally, losing 0.10 on the index, to trade at 82.13 at last check. The euro was slightly weaker but still trading above $1.28 amid once again resurfacing regional debt-related apprehensions, while the loonie was single-handedly helped higher by the $39 billion takeover bid by giant BHP Billiton for the Potash Corp. (which said “No, thanks” for the moment).

Citing overbought conditions in the wake of the yellow metals’ recent surge, German research firm QCR, as well as Commerzbank analysts, opined that it might perhaps be time for a corrective pause in prices. As well, strongly rising inflows of scrap gold were mentioned as possible dampeners to gold’s recent upward thrust. No matter (unless you are of the contrarian ilk), pervasive enthusiasm for a continued gold parabola remains unabated, and at relatively quite high levels (perhaps not all that good for an omen).

Speaking of omens (and of reliance thereupon), there is a lot of chatter on the “Internets” about the “Hindenburg Omen” as applicable to the stock market. Without getting into too much technical detail, the principle it references basically gauges how many stocks are trading at either 52-week highs or lows and tries to extrapolate whether or not a new bear market might be upon us. In the words of Barron’s stock editor Bob O’Brien however, we must “keep in mind that the Hindenburg Omen has accurately predicted fourteen of the last three bear markets…” Nice little factoid, Bob.

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