Gold continues fall but holds $1,600

In the Lead: “Dancing The Night Away”

The carnage in certain commodities continued on Tuesday and some of the price-damaging selling sprees extended into this morning as well. After having dipped some 5% from recovery levels and after having touched values under the $1,600 mark for the second time in a week, gold prices fell about 1% in early morning dealings on Wednesday.

A slightly lower dollar and a 3% recovery in crude oil (factors whose respective strength and decline had been cited as having contributed to gold’s Tuesday slide) did not manage to lend any assistance to the yellow metal this time around. Aggressive fund liquidations kept the pressure on and the precious metals all opened solidly lower for the midweek session. None of that means, however, that counterintuitive moves will not develop throughout the day; we saw just those kinds of gyrations in the Dow on Tuesday for example.

Modest but encouraging numbers related to job creation were released by ADP this morning. The US economy added 91,000 positions in September. Small businesses led the way by adding 60,000 jobs while medium-sized firms contributed 36,000 positions. Large business (hello, Mr. Romney?) shed 5,000 jobs. What is notable in the ADP report is that not only were two-thirds of the jobs added being created by small business but that this sector expanded job-creation for the 22nd consecutive month. And, by small, we mean ‘small’ – firms with 1 to 49 employees. Some say, this is the economic backbone to keep watching.

Spot gold lost $14.00 on the open and was quoted at near $1,610.00 per ounce on the bid-side. It might perhaps be too early to call this kind of action in gold ‘consolidation’ rather than a resumption of the downtrend; not when bearish formations are popping up on charts again. Long-term charts reveal that, according to Thomson Reuters technical analyst Wang Tao, gold’s 12-year bull-run may have drawn to a close with the recent declines in price. Graphically speaking, the statement looks like this:

Image courtesy of Thomson Reuters Metals Insider

Silver shed more than 3.5% ($1.06) to start the trading day off at $29.17 the ounce. Platinum and palladium continued their own sell-offs and fell to $1,449.00 (down $30) and to $555.00 (down $10) respectively. Rhodium escaped untouched and was still quoted at $1,700 on the bid. As mentioned above, the greenback eased a tad and fell 0.10 on the trade-weighted index to reach levels just above the 79 mark. Black gold added $2.12 to rise to $77.79 per barrel and copper rebounded by 1% this morning.

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