The uber-critical $1,527 line of gold’s price defense came into play overnight as we had recently pondered here, and this time around, despite all the denials of the fact and protestations to the contrary, the gold market entered the cave of the bear. Granted that with RSI levels near 20 and with bullish Daily Sentiment indicators perhaps only in the single digits an overdue counter-trend rally might yet delude the bulls, but this is where the market highway junction that really matters is to be found.
A quick round-up of the midweek opening quotes showed gold prices being bid near $1,540 the ounce. The yellow metal has lost $255 per ounce since Feb. 28 and $385 since last September’s peak. Spot silver was quoted at $27.55 per ounce and platinum posting a small loss of $1 at $1,426 per ounce. Palladium lost $5 to reach $586 while rhodium was unchanged at $1,325 after having shed $25 recently. In the background, the US dollar hovered near 81.33 on the index but crude oil slipped $1.40 to $92.60 a barrel (a six-month low), copper was off 1.4%, while the euro continued to struggle near $1.27 against the greenback.
While the majority of recent gold market commentaries kept reaching in vain for any possible explanation for gold’s continuing melt-away, the simplest of all reasons evidently eluded most of their authors. We have now been treated to excuses that range from the silly to the preposterous, as to why gold is not acting in the manner that we had all been promised it would, when and if serious financial conditions such as we are witnessing these days would materialize.
Thus, we are being treated to gems such as: “Gold is down because the putative ‘bankster elite’ wants it to be down” and “gold is down because some ‘paper market’ is deluding people to the ‘reality’ that, in fact, gold is up and that the demand for coins and bars has never, ever been better” and “ advanced algorithms that control commodities and stocks make real price discovery impossible“ or “gold is down because we just had a “Super Full Moon” event.” We could go on…but it is not worth your time.
If anyone cared to dig just a tad deeper, they would have found the principal agent of change in gold prices staring them in the face; the US dollar. Yep, that debt-ridden, good-only-for-fireplace fodder, no-good, sickening green piece of paper, just recorded its 12th session of gains in value. That kind of streak has not been seen since — in the words of Marketwatch — “at least 1985.” Talk of the target level of 90 on the index has suddenly materialized, and such talk could be validated by a breach above the 82 mark on that scale.