Gold Edges Up, Tries To Get Above $1,350

After last week's rout, gold's partially successful attempt to climb above $1,350 in the overnight session is a bit of welcome news. Starting around $1,343, the metal climbed up steadily last night and made it to the low 1350s before tailing off. At 2 AM ET, it stopped marking time and slid downwards in a two-step decline which left it above $1,345 except briefly; its $1,344.50 low was higher than the price it started off at. After bottoming around 6:30 AM ET, it pulled back up and made another run at $1,350. As of 8:04, the spot price was $1,349.40 for a gain of $7.00 since Friday's close. The Kitco Gold Index attributed +$10.75 to predominant buying and -$3.75 to a strengthening greenback.

The U.S. Dollar Index, after sinking down to 78.01, spent the bulk of the overnight session rallying. By 6:45 AM ET, the Index had recovered enough to poke above 78.5 before tailing off. As of 8:14, it was at 78.38.

A Reuters article describes gold's advance as a rebound, one limited by a more optimistic view of the global economy.

"We have got a pretty robust macro backdrop despite some potential for European sovereign issues," said RBS analyst Daniel Major. "Our economists aren't in the camp that that is going to derail global growth and the global risk story."

"The safe-haven argument, which was the dominant theme last year, is unlikely to be repeated this year," he said. "We have already seen slowing interest in exchange-traded funds."

"In the near term there seems to be good physical buying in China and India on price weakness and that is providing a bit of support around the $1,350 level, but certainly the Western investment story has started to wane somewhat."

The article also notes an unusually large jump in the holdings of the SPDR Gold Shares Trust (GLD) on Friday: up by more than 20 tonnes. Although still down on the year, that jump puts GLD's holdings at about where they were on January 11th.

A Wall Street Journal article characterizes the overnight gains as a "respite," spurred by that junp in GLD's holdings.

Economist and trader Dennis Gartman said "much is being made" of the sizable inflows into gold ETFs, which saw holdings in the world's largest gold fund, SPDR Gold Trust, jump to 1,271 metric tons from 1,251 tons at the end of last week.

"However, do we believe that the correction has run its course and that suddenly the health of the gold market specifically and the precious metals' markets generally have been restored just because the sum of gold in [the Gold Trust] or the other ETFs has risen? No we do not, and we trust we are clear on this issue," he said.

Another analyst is cited as expecting gold to test $1,326, but he leaves open the possibility that it will advance above $1,358 and move back to its recently-broken range.

Unfortunately, gold's attempt to get back above $1,350 fizzled when regular trading started. With no U.S. economic news to stir the pot, the metal nonetheless sunk a few dollars before bouncing up. As of 8:46 AM, the spot price was $1,347.40 for a gain of $5.00 on the day. The Kitco Gold Index assigned +$7.70's worth of change to the predominant-buying category and -$2.70's worth to the strengthening-greenback one. The U.S. Dollar Index continued to backtrack, reaching 78.26 as of 8:50.

There doesn't seem to be a lot of optimism around, despite that jump in GLD's holdings. $1,325 still looms, although $1,340 served as an adequate cushion last week. Perhaps this morning's lassitude is for the better, as jumps early on in the pit session have been taken back recently. Gold may well mark time today.