Gold facing largest week-on-week loss since May

In the Lead: “The Don To The Buck: You're Fired!”

The largest week-on-week loss in gold since May and perhaps since early 2009 was still shaping up on the charts as of the overnight hours as the yellow metal headed to near the $1,760.00 area on the back of further signs of euro and European stability. German Chancellor Merkel was heard reciting more comforting words on the topic of the common currency and how it must be defended in the face of debt crisis headwinds while equities on most European markets staged further advances as investors awaited the meeting of the EU’s illuminati over in Poland to yield more news such as the ones that bolstered markets on Thursday.

A concerted market action by five central banks not only wetted the drying up liquidity levels among local banks but it was also declared to be an intervention that will continue through the fourth quarter. While the dollar injection fell short of a Euro-TARP (Le TARP? Das TARP?) and while there is bound to be some disagreement in Poland, the markets at least have something in the way of tangible action as opposed to mere words to soothe them for the time being.

And, as certainty – even a modicum of it – works its way into investors’ psyches, so the need to take refuge in safe-havens ebbs in tandem. That is a shift that normally does not sit well with gold – especially not at the former $1,900 level, to be sure. Such lofty values did not stop one “The Donald” Trump from finally succumbing to auric fever and accept kilo bars in payment of a rental security deposit.

“No green paper for me, thanks!” The Don’s nod (and concurrent blasting of the Obama administration’s handling of the US economy which he used as the motivator for one to load up on gold) towards the precious metal has prompted some to declare that, with this gesture the top in gold must now surely be in.

The news release was a classic case of “I knew it when I saw it but I did not/could not say it.” Publicity stunt, brilliant or unwise move? Who knows? Well, at least the shiny yellow bars, by the way, match his hair color perfectly. Mr. Trump still sees the day when the dollar regains its royal status among the world’s currencies as being in the cards. Provided, of course, his “type” of President is in charge at 1600 Pennsylvania Avenue.

Gold spot dealings started the week’s final session off at the $1,785.00 level (down about $4 as small bargain hunting narrowed earlier losses) as the aforementioned optimism about the European sky not yet falling made its presence felt among speculators. This morning, for a change, the yellow metal declined on the back of a rising US dollar (the greenback added 0.27 to touch the 76.60 mark on the trade-weighted index) and in tandem with a small loss in crude oil (down 40 cents to $89).

The latest monthly report on gold from the ABN AMRO Virtual Metals team finds that gold has now entered a volatile trading phase – one that presents weekly swings on the order of $150 as the “new normal” to which the small investor must warm up to, for lack of a better choice. Volatility is not exactly why said small investor came into the gold space to begin with.

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