Market action began to slow and participation commenced thinning out in the precious metals’ space as the pre-holiday week got started this morning. Gold prices dipped under the $1,600 pivot point once again overnight and then clung to small gains above that same figure as New York trading got underway but neither the direction nor the level of conviction among players were too clear in the initial minutes of trading. The same lack of energy was manifest in other assets as well however; the dollar meandered around the 80.10 area while the euro held onto the $1.30 figure for the time being. Crude oil gained about two-thirds of a percent but copper slipped about one-third of the same.
Spot gold dealings were slow and prices at last check were quoted near $1,598 per ounce on the bid-side (down less than $1 and up from the $1,583 lows recorded overnight). Silver fell 75 cents to the $28.99 bid level and the business in those pits was equally lethargic. Platinum dipped $2 to the $1,415 mark while palladium gained $3 to climb to the $624 level. Rhodium remained at $1,350 per ounce on the bid.
Physical demand was fairly encouraging in some markets, albeit not in India at this point. Buyers there are apparently anticipating a larger decline in prices and are reportedly holding out for such an eventuality. Swiss bank UBS notes that gold is ‘plentiful’ in the local (Indian) markets.
Eyes are now slowly turning toward China at this time as observers attempt to gauge what that country’s demand for bullion will be ahead of the upcoming Lunar New Year. There is some modest anxiety about how much the Chinese public might be willing to spend on gold now that prices of homes have fallen in 49 out of 70 of that country’s cities and investors suddenly do not feel as flush as they did before. China is clearly slowing; partially on the government’s active efforts to avoid inflation, and partially on account of the real estate situation which appears to be sagging under its own weight.
Meanwhile, the dollar reportedly ‘got a lift’ (but gold did not) from the death of playboy-at-large, self-anointed inventor of the hamburger, world’s largest buyer of Hennessy cognac, and former trend-setting fashionista, Kim Jong-Il. The departed dictator’s son is set to take over at this juncture albeit it remains unclear whether he will be sworn in while dressed in a jogging suit or not. He will however be coming in with the moniker of “Brilliant Comrade.”
The next several trading sessions will be characterized by slim participation, year-end book-squaring and perhaps a few out-sized moves that will really not have too much to do with logic or with financial market news. Spectating might just be the most prudent course of action for small retail investors at this juncture. Placing one’s money at risk this late in the year is not something to recommend just now. Gold was reportedly on the defensive after a fresh warning by Fitch’s Ratings as regards France’s status.
A Reuters poll of hedge fund pros, economists and metals traders concluded that gold will fall below the $1,500 level over the next 90 days, despite some quite vocal assertions to the contrary still audible from certain quarters (the usual ones, that see, and have seen, gold as strictly a one-way avenue towards the heavens). Half of those surveyed by the news agency projected that the yellow metal might dip to the $1,450 figure per ounce or even $1,400 if conditions warrant. One fund manager (Christoph Eibl of Swiss firm Tiberius) opined that in 2012 “of all metals, gold will be the worst-performing.”
Last week’s price rout has managed to shift many a formerly ultra-bullish perspective among professionals in the gold niche. The fact that bullion is headed for its first quarterly loss since the gloomy days of the fall of 2008 is not helping either. Again, 50% of those polled by Reuters feel that if in fact gold were to be able to stage another attempt towards previous highs, it might not do so until late 2012 and some see that possibility as only coming around as late as 2014, if at all.