The hitherto easy going in gold’s climb to new records ran into a couple of difficulties overnight and this morning, as talk of a Hugo Chavez-brokered Libyan mediation plan and a couple of other important market impact factors prompted some profit-taking sellers to do just that and drag prices to just under current support levels. This took place even as Mr. Gaddafi’s airborne forces bombed rebel-held oil refining targets near the town of Brega.
The irony of Mr. Chavez proposing to defuse the trouble in Tripoli should not be lost on the reader. The man was at the front of a 1992 Venezuelan uprising that bears certain striking similarities to those currently on display in Libya’s revolt of the masses against a corrupt leader. Since that time, Mr. Chavez himself has been said to have built up certain dictator-like powers.
The International Criminal Court over in The Hague opened an enquiry into Mr. Gaddafi’s actions and alleged (but very likely verifiable) crimes against humanity by stating that “there will be no impunity in Libya” and that “No one has the authority to attack and massacre civilians.” Somewhere between 1,000 and 2,000 people are thought to have been killed thus far in the civil war that Mr. Gaddafi’s recalcitrance has engendered.
Ed. The on-going Libyan violence has give rise to calls for outright military intervention, despite a few hold-outs such as Russia and Turkey declaring it as “unthinkable.” What appears more unthinkable is that the world once united (well, almost unanimously) against, and intervened to remove, certain individuals named Saddam Hussein or Slobodan Milosevic. The Colonel may not be in possession of nukes, but he has enough other lethal stuff at his disposal with which to wreak humanitarian havoc upon Libya’s denizens. Thus, a “no-fly zone” might be a good starting point in the process of excising the Gaddafi cancer from Libya.
At any rate, any small whiff of potential peace breaking out in Libya was quickly conducive to an overdue dip in crude oil prices and to a corresponding (at least in percentage terms) pullback in gold as well this morning. However, gold prices were also seen reacting to a couple of other factors which (absent the Libyan events) would have made for similar drops on a market day such as today. Let us examine them in order of appearance on the news scene: