Gold sentiment turns negative as dollar rises

In the Lead: “Hubble Bubble Trouble”

Some and eventually more than all of Monday’s gains in gold were handed back by speculators this morning as a further rise in the US dollar and a hefty slide in crude oil made life a tad more difficult for the bulls in the yellow and white metals. Spot New York dealings opened with a loss of $11 in gold and a bid-side quote at the $1,650.00 pivot point. Silver fell 14 cents to start off the session at $30.35 after having itself nearly touched the $30 pivot figure in early dealings. Greek debt-related angst continues to keep the markets unsettled and Monday’s 250+ point slide in the Dow has brought the specter of margin call-related asset sales back onto the front burner.

Gold fell to under the $1,620.00 level by 11:30 AM in New York as players unwound positions in a hurry even though the dollar slipped away from the 79.50 mark and even though oil leveled off at $77.50 per barrel. The general tilt in gold remains aimed towards lower levels for the time being. We would also advise keeping a permanent focus on the resurgence of…mine hedging.

The opposite phenomenon has been clearly known to be a major contributor to gold’s price gains over the past decade. Well, now, GFMS/Thomson Reuter reports that the world has seen its second consecutive quarter of net hedging. While the amount (six tonnes) is still relatively small, the fact that such a paradigm has not been manifest since 2001 should speak volumes to those who kept banking on mine de-hedging to continue to buoy gold prices indefinitely. It might just turn out that the diggers have begun to feel that their own CEOs’ calls for mega-priced gold could be…over-optimistic.

The S&P 500 index is now under the 1,100 mark and talk of bears prowling around is once again manifest among analysts. The $13 trillion or so that has been wiped off the value of global equity markets since the skies darkened this summer is not going unnoticed by the investment or the market analytical communities. Talk of deflation is once again making the rounds among economists.

Platinum fell an additional $28 to open at $1,478.00 while palladium managed a $1 rise to open at $585.00 the ounce. Yesterday’s robust US car sales tallies has thus far failed to ignite much bargain hunting among noble metal specs as has the near-$200 premium in gold against platinum; a whopper of some proportions. Speaking of things automotive, Ford Motor and the UAW reached a tentative agreement that might see the creation of 12,000 hourly US-based jobs by 2015.

Black gold was seen trading at a one-year low of $75.27 and showed signs that point to aggravating fear among specs on the back of news that Libya’s oil spigots are being almost fully reopened and that Goldman Sachs has revised its Brent crude projections for 2012 to lower levels. The dollar remained higher on the trade-weighted index and traded at 79.66 to 79.75 in morning dealings.

Goldman Sachs’ crystal ball department also issued revised estimates for global GDP growth today. Unsurprisingly, the projections call for a lower level of economic growth around the world this year and next. Former estimates had 2011’s global GDP reaching the 3.9 level; that has now been scaled back by one-tenth of a percent. Next year’s global output might only come in at the 3.5% level after previous projections had placed it as high as 4.2%.

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