Metals prices with the exception of silver attempted to recover some of Monday’s heavy losses in early trading action in New York this morning. The yellow metal fell $34 yesterday and touched lows near the $1,768 level. The currently apparent fatigue being exhibited by the precious metal has not changed the fact that the blogosphere remains laden with unequivocal pronouncements that gold “has to go up” and/or that it “cannot go down.” Not everyone agrees, however:
Late Monday Elliott Wave updates offer the opinion that if gold were to convincingly break under the $1,702 mark then we could expect a series of sell-offs to commence to push it much lower on the charts (initially towards the $1,669 level). In the absence of that decline at this time, there remains a possibility that the current vacillation within a possible “bullish triangle” in bullion might conclude with yet another push to the upside and the previous peak, or possibly even higher, before the major decline commences.
Gold spot opened with a gain of $8.40 per ounce at the $1,787 level as the US dollar traded 0.36 lower, at the 77 mark on the trade-weighted index. Gold’s initial gains narrowed considerably within the first hour of trading and the precious metal briefly dipped back into the red price column to trade at $1,778 after the coffee-break hour. Then, as the mid-morning passed, bullion vaulted higher and recaptured the $1,800 mark with relative ease albeit there was no substantive market-moving news to be found by speculators.
Chalk it all up to the by now customary “new normal” in gold. Thank you, hedge funds. Still, MF Global analysts are leaning towards “selling the rallies” in the yellow metal and are projecting a price band for gold of from $1,700 to $1,750 within a matter of a few weeks. Just as the dollar did not make any sizeable moves, the euro did not stray very far from the $1.37 area for the time being, either, as it apparently shrugged off another (by now) ‘routine’ S&P debt verdict. The Dow, on the other hand, got a 120+ point boost this morning (and so did oil) on the hopes that there is light at the end of the Greek tunnel and that the Fed will not let markets down. The Dow gained despite the lackluster US housing-starts data.
It could also be that euro-sellers stepped back from selling the currency after they witnessed the ECB stepping in to buy Italian government bonds in the wake of the S&P downgrade. Silver opened weaker and showed a loss of 29 cents at the $39.36 bid quote. The white metal is still trying to tread water above the $38.70 level-one that, if broken, could draw it down towards the low $32s area. Until such a breach of the aforementioned pivot point happens, the potential for a quick and aggressive push to a level as high as $45+ remains on the radar.