Gold feeling pressure of increased volatility

In the Lead: “BOWLing Green in Gold Alley“

Tuesday’s market trading sessions in New York opened under growing selling pressure in the entire precious metals complex. Following a fresh sprint to new overnight highs (very near a first Fibonacci extension level at $1,915) and amid 98% bullishness levels (seen on both Friday and on Monday) gold retreated to as low a level as $1,862.00 this morning.

But, hey, $55 of a move in the span of a few short hours is like…so “normal” in the latest scheme of things. The very thing that gold is supposed to mitigate against to a certain extent (volatility) is the attribute it has taken on of late. This is a paradigm we might have to learn to live with for a while however. It is not like the spec funds have turned to “greener” pastures elsewhere just yet…as will likely be seen later in the trading day (and even turn-around on a dime that should not surprise anyone).

Spot bullion dealings opened with a loss of $19.40 but the yellow metal’s losses soon accelerated and a $35+ decline was noted within the first hour of trading this morning. Still, very few will conclude that this pullback can even remotely be labeled as anything more than a mere hiccup. Nevertheless, as of last night there was a (suddenly) growing list of observers who overtly expressed certain levels of “discomfort” with gold’s latest and greatest 400 meter (make that dollar) dash.

Elliott Wave short-term update issued on Monday evening noted conditions in the gold market as having shaped up in a manner whereby “because of the exponential, bowl-shaped advance [in gold], Wall Street’s talking heads uniformly agree that gold NEEDS to be “a part of a balanced portfolio.” If the same people said this about gold back in 2001, they would have been classified as nuts.” EW goes on to opine that gold is “now the last of the red-hot manias,” even as it refrains from being “too aggressive about calling a top.” Current tally: 16% up – one month.

Silver continued not to confirm gold’s latest advances even though it put in a very decent “performance” on Monday, This morning however, the white metal gave back more than 50 cents (and at one point, $1.20) of its recent gains and fell to first open at $43.12 and then also visit the $42.50 area subsequently. From a wave-count perspective, silver remains inside of a window that could signal its final subdivisions up from $43.18 to $46.14. Breaking the $36.96 level might be the confirmation of the onset of a third-wave decline in the metal.

Platinum and palladium showed a bit of a divergence this morning as the former fell $20 and retreated to under the $1,900 mark ($1,881 at the open) and once again drew to virtual parity with gold. Palladium on the other hand managed an advance of $1 to start the day off at $762.00 the ounce. Rhodium retained its recently achieved small gain and remained quoted at $1,875.00 per ounce. We now have a developing three-way tie in gold, platinum, and rhodium and it does raise the question of which one (at least as regards Au/Pt) will “blink” first and either slide or advance and thereby reestablish a historically more traditional premium to gold.

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