Gold feeling out new European leaders

In the Lead: “NEUrope!”

Monday’s markets opened with far less “Europtimism” than had been manifest on Friday and traders once again flocked to the relative safety they continue to perceive in the US dollar. The euro did not mount an advance towards the $1.38 level, European stock markets lost some ground, and commodities did not take off in the robust fashion that had been expected when the weekend rolled around. To wit: Italian bond yields ticked higher despite the job changes taking place at the Quirinal Palace in Rome.

About the only folks who appeared to be in a celebratory mood in recent hours where the throngs in the streets of Rome who were seen out en masse chanting “Buffone! (Clown!) and “In Carcere! (To Jail!)” when the “Cavaliere” passed them by in his limo on the way to his long-awaited resignation. Mr. “Bunga Bunga” faces up to 40 (forty!) court “dates” between now and next May – some of them for “paid dates” with allegedly underage nightclub “personnel.” Then there are myriad charges for corruption in his media empire and such. Bravo.

Thus, gold spot dealings in New York opened the week on a downward note, losing from .50% to 1% and basically trading in a channel of from $1,770 to $1,780 without Friday’s display of bullish energy. Spot bullion commenced trading at $1,781 per ounce with a loss of $8 as the “Mario 1UP” bounce failed to materialize in various markets. The opening mood might still morph into an upbeat one as we have recently witnessed on more than one occasion where the dollar climbed and, counter-intuitively, so did the yellow metal.

Still, gold market contrarians remain on “alert” following Friday’s nearly unanimous Bloomberg weekly gold survey in which 21 out of 22 traders chimed in as ‘bullish’ for this week. As well, market players are keeping a close watch on the ebbing of physical offtake in the gold market and the dominant position in the space that the specs and investors have come to take. For the time being however, the two price buoys on the ends of the “must-watch” spectrum in gold remain the ones floating at $1,580 and at $1900+ per ounce.

Silver dipped 24 cents to open at the $34.42 per ounce mark and was apparently stuck in a $1 range that extended from $34 to $35. The noble metals group did enjoy a minor lift however, with platinum advancing by $5 to the $1,644 level and palladium rising $2 to the $658 bid-side quote. Rhodium remained at $1,675 per ounce.

The Dow initially fell about 20+ points in a lackluster start to the trading week. In the background, black gold slipped 70 cents per barrel to the $98.30 level while copper staged a 1.72% advance. While today will be lacking in economic statistical data releases, this is certainly not going to be the case over the next four days as a slew of information from retail sales to CPI and from housing starts to LEI are in the pipeline and will likely provide plenty of fuel for market twists and turns during the week. But, back to the current situation for now: The anticipated market stabilizations in the wake changes in leadership in Greece and now in Italy have shown signs of fading rather fast as the new trading week got underway.

The optimism that was supposed to lift European equities and the common currency eroded after yet another set of reassertions by the ECB that it will not succumb to pressure and play a bigger role (read: Print money) and after Chancellor Merkel again rejected suggestions that the EU’s members get together and issue some kind of joint bonds. In plain English (or German), Bundesbank President Jens Weidmann told market vigilantes and other printing aficionados that "Monetary policy cannot and must not solve solvency problems of states and banks, this has to be decided by national parliaments."

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