Gold showing losses after rally fails

In the Lead: “The Price of Friendship”

Gold prices dipped once again overnight and this morning after trying to mount an assault on the mid-$1,800s on Tuesday. The yellow metal was not alone in losing value; silver and the noble metals plus a host of other commodities from crude oil to copper also sold off as fears that the still-lingering eurozone crisis and slowing Asian regional growth will end up impacting demand for them.

The entire complex has been buffeted by incessant volatility and indecision rules the day for yet another session. Just yesterday crude oil touched a six-week high after declining stockpiles emboldened traders to push it higher still, despite a recent gain (over the previous two days) of three percent.

The opening of this morning’s trading action in New York had gold on the back foot with a loss of $11.50 per ounce and a quote on the bid-side at $1,822.70 the ounce. Silver lost 20 cents and traded just under the $41.00 mark. Platinum bucked the trend and added $6 to rise to the $1,817.00 level while palladium dropped $1 to ease to $721.00 the ounce. European auto executives have warned about a possible slowdown in 2012 in their industry due to the persisting crisis.

As mentioned earlier, copper lost more than 1% and was bid at $3.94 while crude fell half a dollar to the $89.70 per barrel mark. The greenback was trading at just under the 77.00 level on the trade-weighted index. US August retail sales came in flat versus July’s levels, and so did wholesale prices. The statistics might make for a tad weaker dollar today, which, in turn, could limit the damage in the precious metals’ complex. The $1,780 to $$1,830 channel in gold remains, for the time being, the confining one that speculators need to heed. Speaking of the US dollar, read on:

While the world has been mesmerized with the slow-motion implosion of European debt, a quiet, but notable turn-around has taken place in the US dollar last week. This is an event that you are urged to take note of and keep on the radar as it might very well mark the beginning of a potential battleship turn in the value of many asset classes. It is not often that a particular asset pierces its 50 and 200 day moving averages and does not firmly head into the direction that took it to those pivot points. The greenback made just such a break last week.

This recent breakout by the greenback has several possible implications. Chief among them is the possibility that its gains in strength might drag the stock and commodity markets to lower value zones. If in fact the decade-long slide in the dollar is possibly reversing, the repositioning of investment allocations might become a top priority for many a money manager in coming weeks and months. Much still depends on where the US economy finds itself as next year begins, but the dollar’s turn still bears close watching.

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