Gold whipsaws after Swiss action

In the Lead: “Franc-ly Our Dears, We Do Give A Damn…“

Bungee-jumping without a helmet held nothing over being a market participant last night in terms of the thrill of rebounds and the agony of freefalls. Gold prices ran across a $64 price spectrum giving almost everyone their money’s worth over the span of just a few intense hours. Whatever corrective action the recent drop to near $1,700 presented in terms of a developing trend was quickly forgotten during the past week and overnight. Quite the debut for the resumption of full participation by the trading crowd, one might add.

Trading in New York had not yet opened this morning when the yellow metal set a fresh price peak at very near the previous one and then dipped as low as $1,858 following certain…central bank-flavored currency market developments. As if on cue, gold’s renewed assault on higher prices was immediately accompanied by reassurances that it does not find itself in a bubble; nor that it might ever really do so.

As well, we are told, this is “normal’ volatility for an asset that is supposed to offer shelter from the very thing in question. On the other hand, some trading floors are getting the feeling that the “patterns” being manifested in this market at the present time warrant some precautionary action. Funny, such developments usually come about precisely when extreme volatility does present a potential problem to certain market-participating parties (all of them).

Actually, there is hardly anything “normal” about most of these markets, at present. To wit, the NYSE moved to invoke ‘Rule 48’ in a bid to mitigate what it expected to be a heckuva volatile trading session ahead for today. The Dow was down 270 at last check…

Unsurprisingly, this morning’s opening tally in New York presented a mixed bag of prices and price directions. Spot gold opened near $1,892.00 (down nearly $8) while silver started the session down at $42.20 with a 65-cent loss. Platinum was down as well, losing $20 and being quoted at $1,865.00 the ounce.

Palladium bucked the trend, rising $2 to open near $763.00 per ounce. Rhodium appeared immune to the turmoil and remained bid at the $1,850.00 per ounce level. News from South Africa had Zimbabwe’s President Mugabe saying that he expects foreign firms (mining ones among them, of course) to fully cooperate when the planned switch in ownership stakes in local operations eventually takes place. Mr. Mugabe also said that there is a plan afoot to establish a state mineral exploration firm that will gauge the size of the country’s wealth that resides underground.

The analytical team over at Standard Bank (SA) sees that “silver and platinum continue to track gold’s moves, while palladium remains largely unresponsive. Perhaps the lack of reaction in the palladium market over the past week is partly due to a cautious speculative market. According to the latest CFTC data, [palladium’s] net speculative length fell, losing 52.7k oz over the week ended 30 August. Net speculative length remains relatively weak compared to previous years. For now, participants in the palladium market seem to be waiting in the sidelines.”

What else was down? Crude oil, for starters. Black gold fell 3.5% and dipped under $83.60 per barrel. Copper fell to a one-week low, but the US dollar gained traction as safe-haven seekers…sought it out (it was last seen at 75.59 on the index, up 0.31). In fact, the greenback appears to be breaking out of its recent consolidation pattern after having put the brakes on near the pivotal 73.50 mark on said index.

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