Gold Recovers After Initial Bobble

After a nearly six-dollar drop when the week's trading began, gold recovered somewhat and traded in a flat range between $1,346 and $1,348. An attempted rally to $1,350 around 4 AM ET didn't last, and the metal went back into its range. For the most part in the overnight session, it traded dully. As of 8:13 AM, the spot price was $1,347.50 for a drop of $1.10 since Friday's close. The Kitco Gold Index attributed +$0.40 to predominant buying and -$1.50 to a strengthening greenback.

The U.S. Dollar Index started above where it closed on Friday, but sunk down to 77.9. Dipping down a little around 2 AM, it then rallied before dipping back down. A double bottom at 77.84 made, it climbed more durably to peak at 78.25 before pulling back. As of 8:19, it was at 78.11.

A Wall Street Journal article said gold nudged down as risk appetite still increases.

"Prices are flat this morning as sentiment builds that the economic recovery is on track and concerns over the unrest in North Africa appear to subside," said Fairfax I.S. analyst Angus Burt....

Support for gold, though, is "seemingly rather strong" at $1,342/oz-$1,345/oz, said independent economist and trader Dennis Gartman, who added that he is modestly more bullish on gold now than he was up until about a week ago....

"So long as that support holds this morning, we shall sit tight with what we own, comfortable in the position and hoping to have the market insulate our position from random market noise," Mr. Gartman said.

The article also quoted Harmony Gold Mining Co. Chief Executive Graham Briggs as saying that gold will rise to another record high this year, buoyed up by renewed investment demand.

An earlier Reuters article said gold ticked up from its stumbling start but was limited by the recovery trade. It wasn't helped by President Mubarak staying in power over Egypt.

"I think that markets viewed the (U.S.) payroll report as positive in general. Copper surged above $10,000 a tonne [about $4.55 a pound]. If you look at industrial metals and equities, they have moved higher," said Ong Yi Ling, investment analyst at Phillip Futures. "Investors have greater confidence regarding the economic recovery and hence safe haven demand for gold could be reduced as investors switch to risk assets," said Ong, who pegged resistance at $1,360 an ounce....

Spot gold is expected to fall to $1,324 per ounce, as it could have completed a rebound at Friday's high of $1,357.93, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.

The article also noted that holdings of the SPDR Gold Shares Truse declined a little on Friday, to 1,228.864 tonnes.

Lacking any news, the metal went on a modest rally, which started just before regular trading began, that took it above $1,348 to $1,354.40. As of 8:44, the spot price was $1,352.50 for a gain of $3.90 since Friday's close. The Kitco Gold Index assigned +$6.60's worth of change to predominant buying and -$2.70 to greenback strengthening. The U.S. Dollar Index, after continuing its slide down to 78.05, rebounded strongly. As of 8:48, it was at 78.18.

The start of the week hasn't been great for gold, but the rally at the beginning of regular trading has set a nice tone for the rest of today's shift. Although rallies above $1,350 haven't been durable lately, it's encouraging to see the metal try. This day might do it.