Gold Has Dither Day, Closes With Mild Loss

After bumping up against $1,540 in overnight trading, gold settled back into the high 1530s but slipped below $1,535 in the morning. Losing its footing, the metal spent almost all of the afternoon in the low 1530s. Unlike silver, which managed to hold on to a decent gain, and unlike WTI crude oil, which made a run at $103 and closed with close to a 3% gain from its $100 starting point, gold ended the day with a loss. About half of that loss erased the trickle-trade gain yesterday, but the metal still ended up below last Friday's close.

Today was one of those days when the first half hour of regular trading foreshadowed the rest of the day. The first time gold fell below $1,535 today, other than a blip, was at 8:30 AM ET when it slid to $1,533. Picking itself up afterwards, it first bumped against $1,535 and then jumped up to $1,538. Then followed some climbing and sliding, which became more volatile until the metal touched $1,540 again in late morning.

Afeterwards, it tired out and slid back down to $1,533 in light trading. Having reached that level right after noon, it stayed in the low 1530s except for brief blips as it lumbered to the close. Trading became lighter and lighter as the end of the day approached. At the close, the spot price was $1,534.30 for a loss of $4.80 on the day. The Kitco Gold Index attributed -$11.90 to predominant selling and +$7.10 to a weakening of the greenback.

Gold's six-month chart, from Stockcharts.com, shows its small loss coming on the heels of last Friday's much larger gain:



Since Stockcharts.com doesn't include the data that came from the miniscule trading yesterday, today's decline follows on the heels of Friday's trading. Despite several tries, the metal has been unsuccessful at getting above the $1,540 resistance level. Even though the greenback has sunk quite a bit since its peak, its fall has been able to push gold only so high. When $1,540 approaches, there are too few buyers to fend off the sellers. Despite that block, gold's in a fairly good position as June approaches. Although May of last year was better - back then, the metal managed to recover almost all of an earlier plummet - this May has seen a decent recovery after the rout at the beginning of the month. Seasonally, there is a risk of further drops in the summer: gold's mid-year low last year was in mid-July. For the patient, there's likely to be a bargain during the dog days of summer. Until then, gold may disappoint despite its fine showing this month.

As for the U.S. Dollar Index, it stayed in a range it carved out just before regular trading started. The bottom of the range was 74.5. The top was extended slightly just before noon, when gold slid to the low 1530s, to 74.69. Since the earlier top was only slightly below that new high, the Index essentially stayed in its range for the entire day. As the afternoon wore on, it eased downwards to 74.6 and started fluctuating around that level. When 5:15 came, it was torpid at 74.595.

Its own six-month chart, also from Stockcharts.com, shows how much has been taken off its earlier countertrend climb:



As of now, the Index has retraced close to half of its earlier run-up. Its Moving Average Convergence-Divergence lines, found at the top of its chart, have made a bearish cross. Its Realtive Strength Index, found at the top of its chart, is now well below neutral. It has definitely made a technical breakdown, as seen by its descent to well below the old 75 support level. However, it might turn around yet although not to a high higher than its 76.5ish peak. It might haul up to the 75s again: today's candlestick makes for a gap relative to last Friday's, and those gaps tend to be filled. For a downward gap, that means a rebound.

Although headwind season is here, gold is still making out all right. It should have some troubles in the summer, but its long-term bull market is still intact. Should the seasonality hold, the metal will forge ahead to new highs in the fall. If next fall sees a run like last fall's, $1,600 will yield and $1,700 might. I really don't know how high gold will go, as easy money and global inflation are still very much with us. I can only warn: once the turning point comes, once the long-term bull turns into a bear, few people will see it at the time. Gold is not in a mania phase yet, contrary to my expectations, but it's getting there. I have little doubt that it will enter one before this bull market ends. Should gold go crazy, the best advice I have is to sell down to the point where you're playing with house money except for your core holdings. Get your cost basis to zero or below, in other words.

That advice pertains to some indefinite point in the future. For now, despite any seasonal headwinds, the long-term direction for gold is up.

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You may have noticed that my postings have become more irregular recently. That's because I've had personal committments that are clashing with the time slot in which I write for this blog. Accordingly, but with regrets, I'm folding the tent up because I can't assure anymore that I'll be able to post in a timely manner.

There'll be one more post after this one explaining where I got my items from, which will be up by early tomorrow morning. It'll be for anyone who'd like to keep up for themselves. I really regret giving this blog up, but it's time for me to head to a different pasture - one with a more flexible schedule. Thanks so much for reading what I've posted; those thanks are given especially to any regulars. I got into blogging about gold because I thought I'd be blogging though a blooming mania, which has not come to pass. My underlying motive was to warn everyone when I thought the bubble was about to burst. Right now, there's no need to. Gold will continue to fluctuate, but there's no mania as of yet. I still might write such a piece when gold does go manic, but that could be years away.

Again, thank you and take care. May the gains rain softly on your portfolio.

Gold Slumps Despite Greenback's Tumble

The creep-up that took place on razor-thin trading during yesterday's holiday reversed itself this morning, despite the greenback tumbling last night. WTI crude oil managed to gain $2 a barrel, and silver put on close to 40 cents an ounce from yesterday, but gold failed to follow in either of those other commodities' wakes. The holiday hiatus over, the metal dropped to $1,537. After a challenge of the $1,540 resistance level, which got it well above $1,540, it sunk to $1,535 and fluctuated in the high 1530s. Around 4 AM ET, with the greenback slumping again, gold again challenged the $1,540 resistance level and got up to $1,541.40. Again, that challenge would be defeated: the metal slumped down to the high 1530s and stumbled around. Not helping gold, but helping the Euro, was a report that May Eurozone twelve-month trailing inflation unexpectedly slipped to 2.7% from April's 2.8%. Although the official explanation has not been given, the most common-sensical reason is a drop in oil prices. That slip is not expected to stop inflation from peaking above 3.0%; nor is it expected to deter another rate hike by the European Central Bank.

As noted above, gold didn't get any real boost from the usual source even though two other inflation-linked commodities did. As of 8:15, the spot price was $1,536.10 for a drop of $3.00 on the day. The Kitco Gold Index attributed -$9.30 to predominant selling and +$6.30 to a weakening greenback.
The U.S. Dollar Index, as indicated above, greeted the return of normal trading with an extended skid as the Euro recovered to erase about half of the loss it sustained early this month. From around 74.95, it first slipped and then tumbled last evening to bottom around 74.45 last night. A recovery climb topped out at a little above 75.65 which was reached at 3:10 AM ET. After that peak, the Index slid to 74.475 but double-bottomed there. It then climbed up to 75.65 it settled into a range. As of 8:24, it was slipping back at 74.60.

A Reuters report said that gold was pulled in two different directions by nervousness over Grecian sovereign debt and a rise in oil, which the article said held gold back. The Euro was lifted by a Wall Street Journal report saying that the German government may make concessions to facilitate another bailout of the Grecian one. Still, gold's down on the month and is having a tough time climbing.

"We have the Greek and the U.S. debt issues, it is all supportive, but what is going to make gold go back up to the highs of the year? Can it achieve that just by renewed interest or does it require some big-impact event?" said Mitsubishi analyst Matthew Turner.

"We've seen after a brilliant start to the year, the global economy has slowed quite quickly, partly due to Japan but also because of a slowing China and a slowing U.S. and so on ... the question is can the economy recover on its own or will it get worse, or will we see more stimulus measures?"

Speculators increased their holdings of gold contracts for the first time since mid-April last week. Gold ETFs, although still down on the year, have attracted more cash than other commodity ETFs this month. Because of the Memorial Day holiday, holdings of the SPDR Gold Shares Trust were unchanged yesterday at 1,213.17 tonnes.

A Wall Street Journal report said that spot gold came close to making a four-week high on Eurozone concerns. The article saying that the German governnment may drop its demand for Grecian sovereign debt to be rescheduled as the price of the second bailout, helped the metal somewhat.

In a monthly report, Swedish bank SEB said the persistent speculation over the debt crisis, including the recent impasse over Greece's funding needs as well as the increasing risk of contagion within the euro zone, is lending strength to the market.

Continuing demand for the metal as a hedge against inflation in China is also supportive for gold and should help the market to "easily" pass above $1,600 per ounce in the short term, the bank said.

Gold ETF holdings are also creeping up.

With no economic data to influence it, gold sunk to the low 1530s after regular trading started. Although initially holding above $1,535, it sunk below on the greenback reversing direction and making a run at 74.65. As of 8:42, the spot price was $1,533.90 for a drop of $5.20 on the day. The Kitco Gold Index assigned -$11.35's worth of change to predominant selling and +$6.15's worth to greenback weakening. After making that jump, the U.S. Dollar index slipped back after encountering resistance, but it got its strength back and tried again. As of 8:46, it had slipped again at 74.61.

Yesterday's gains were reversed, which isn't that much of a surprise since trading was very thin and unrepresentative of a normal day. Despite two tries at breaking $1,540, gold fell further below its close last Friday once 8:30 arrived. It's not a very auspicious start to the shortened week, but the first half hour of regular trading isn't often representative of the rest. Still, gold is going to endure some volatility today as the greenback shakes off last night's tumble. With luck, there'll be another try at $1,540 but the odds don't seem good for a sustained break above that resistance level.

Gold, On Hair-Thin Volume, Creeps Up

There was a bare trace of trading until 1:15 PM ET, in which gold snuck up. Although it made a new 3-week high by briefly touching $1,540.40, the volume was so thin that it would have to be endorsed on a regular day's trading. Thin days tend to see wider bid-ask spreads. Gold's climb was fairly smooth if the granularity is omitted. Since it's Memorial Day in the U.S., there are no six-month charts for either gold or the U.S. Dollar index today.

At the end of today's blips of trading, the spot price was $1,539.10 for a gain of $2.60 since Friday's close. The Kitco Gold Index attributed +$6.60 to predominant buying and -$4.00 to a strengthening greenback.

The U.S. Dollar Index did trade for the entire day, but it barely budged. Moving up early this morning from 74.9 to 75.0, it failed to break above that resistance level and trudged around the 74.5 level. It sank very slowly throughout the afternoon. As of 5:15, it was slipping at 74.925.

That was it for this U.S. and U.K. holiday. As a result of gold's sneak-up, the end-of-day benchmark for tomorrow's trading is going to be a little higher. If today's gain is endorsed, there'll be a challenge of the $1,540 resistance level in overnight trading. Where gold really stands will be made evident tonight and tomorrow morning.

If you're celebrating the holiday, I hope you're enjoying yourself. Best wishes.

Gold Dawdles Around $1,535

The beginning of the week saw gold hardly moving. Sliding gently down to $1,535 last night, it stuck around that level all morning before slowly climbing at 5 AM ET. WTI crude oil fell a little bit, touching $100 after sinking to as low as $99.75. Silver also fell, subsequent to a jump last evening. Both of those other commodities were influenced by a recovery in the greenback, which affected gold little. As of 8:08, the spot price was $1,536.40 for a loss of $0.10 since Friday's close. The Kitco Gold Index attributed +$3.30 to predominant buying and -$3.40 to a strengthening greenback.

The U.S. Dollar Index climbed to 74.9 yesterday evening, a level at which it hung around until midnight. Then climbing further, it touched 75.0 before sliding down. From 2:15 to 4:40, it slipped from 75.02 to 74.85. Fluctuating in a range subsequently, centered at 79.88, it marked time until jumping up after 8:05. As of 8:16, it had reached 74.95.

A Bloomberg report said gold may continue to rally on fears of accelerating inflation and worries over Greece. Gold hit a record high in renminbi terms. Even though he didn't win support from opposition parties, Greece's Prime Minister George Papandreou said he'll try to enact new austerity measures.There's still worries that the Grecian government will not be able to pay its debts.

“Gold’s uptrend remains in place, with people being fidgety about Europe’s debt crisis,” said Chae Un Soo, Seoul- based trader with KEB Futures Co. “The metal is going to approach a record this week where it also could face heavy sell- offs to moderate rapid gains in prices.”

Seventeen out of nineteen participants in a Bloomberg straw poll of traders, analysts and investors said gold will rise this week.

A Reuters said gold was buoyed by the simmering Eurocrisis while gains were held in check by a decision of the Shanghai Gold Exchange to increase margins.

"The margin hike in Shanghai Gold Exchange is adding pressure to prices," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong....

Fung said $1,500 should offer strong support to gold, and prices are likely to reach $1,600 by the end of the year as investors continue to buy bullion to protect themselves against economic uncertainties, a view echoed by other market players.

"The speculators are coming back, mainly driven by the European debt crisis," said a Singapore-based trader. "Gold is likely to slowly move up during the summer unless we see big headlines, such as the U.S. raising interest rates earlier than expected."

European Union officials are expected to pronounce a verdict on the Grecian government's attempts to bring its budget under control. Holdings of the SPDR Gold Shares Trust shrunk 0.91 tonnes last Friday to 1,213.17 tonnes.

An earlier Wall Street Journal report said gold sunk slightly in Asia as the market awaits a slew of U.S. economic data this week.

Greek leaders Friday failed to reach a consensus on a plan to manage the country's economic crisis, heightening worries about the ability of the European Union to deal with member-countries' sovereign debt.

A weaker euro, which analysts said is a possibility early in the week, could weigh on the markets.

Commodity markets remain "at the mercy of what's happening in the currency markets," IG Markets institutional dealer Chris Weston said. He expects the yellow metal to touch $1,600/oz before the end of 2011.

Since recent data have been largely disappointing, there's an expectation for futher misses in the week ahead.

The U.S. is celebrating Memorial Day today, and the U.K. has a bank holiday, so the markets are closed. Gold, at the time when the pit session would normally open, shifted around between $1,536 and $1,537.50 before coming to a rest in the higher half of that range. As of 8:25, the spot price was $1,537.20 for a gain of $0.70 on the day. The Kitco Gold Index assigned +$4.50's worth of change to predominant buying and -$3.80's worth of change to greenback strengthening. The U.S. Dollar Index, still trading, stayed stuck just below 75.95. As of 8:46, it was still stuck at 74.94.

The overnight session didn't see a resumption of gold's upward climb, but the metal did hold its own. Once trading resumes, gold is likely to keep dithering as more clarity on the U.S. economy and Grecian sovereign debt is sought. The latest word on the latter is: the European Union is seeking a stricter new bailout, which would authorize intenational intervention in tax collection as well as privatizing government-owned assets. More austerity measues would be included too.

If you're celebrating a holiday today, enjoy the break for all it's worth. Happy Memorial Day to Americans: at the very least, the American government doesn't have to have its financed pawed by outside parties.

Gold Ends Week With Strong Gain Due To Sinking Greenback

Now that the latest phase of the Eurocrisis in no longer new and disturbing, demand for the greenback is fading and demand for gold is increasing. As the U.S. Dollar Index broke below its 75 support level, gold forded up to a new three-week high. For a time this afternoon, it was less than forty dollars below its all-time record high; its high point of the day was just below the $1,540 resistance level. Although almost all of gold's gain today was due to the weakening U.S. dollar, the currency tumbled enough to make for a strong double-digit rise. Turning the recent differential on its head, silver hardly budged while gold was energized.

Today was one of those days when the start to the pit session accurately foreshadowed the entire day. Gold started rallying from $1,525 at 8 AM ET and continued upwards to $1,530 when the pit session started up. Then blocked, it spent some time shuffling between $1,528 and $1,530 before a renewed tumble in the greenback gave the metal the energy to shoot up to $1,535 by 9:45. Blocked again, it settled into a higher range until late morning when another greenback stumble got the metal up to its daily high of $1,539.50. It hit that peak a little after noon, and spent early afternoon in yet another range - this one, between $1,536 and $1,538.

Later, the metal slumped down to the low 1530s, but its descent ended a little after 3:00 when the greenback slumped again. For the last two hours of the session, the U.S. dollar's continuing drop left gold unaffected as it marked time around $1,536. As of the end of the week, the spot price was $1,536.50 for a gain of $17.10 on the day. The Kitco Gold Index split the gain into +$0.70 for predominant buying and +$16.40 for greenback weakening. For the week, the metal gained $22.80 or 1.51%.

Gold's six-month chart, from Stockcharts.com, shows yesterday's decline being smartly reversed:



To be frank, I thought the two-day decline would spill over into today. Since it didn't, yesterday's and the day before's slumps were too ephemeral to count as an outright short-term decline. Today's gain counts as a the second higher high since the plummet of four weeks ago. That said, gold's uptrend has been made a little stronger. What makes the $1,540 resistance level significant is that it marks the point where two-thirds of gold's $120 plummet is reversed. Should gold get and stay above that level, the current recovery is stronger than a mere relief rally. Although it's unlikely that gold will continue upwards to make a new record high that's well above the current $1,578.20, the metal has shown enough strength to have fallen into an intermediate-term consolidation pattern. That's much better than a correction.

As indicated above, the U.S. Dollar Index spent most of today tumbling. Close to 75.2 at 8 AM, it was hit hard by the advent of regular trading. Bottoming at 74.905, it snapped back up at 8:35 with the news that consumer spending for April increased only by 0.4%: the same as income. Peaking at 75.2, the Index then lost its energy and dawdled in a range before collapsing a second time. Its second bottom, made around noon, was lower than its first. Unlike the first recovery, it couldn't get above 75. Starting at 2:00, it slid down slowly at first but accelerated as it lost more footing. At the end of the week, it was close to its daily low at 74.77.

Its own six-month chart, also from Stockcharts.com, shows its recent uptrend definitely impugned:



The Index's higher high, from which it's been falling, has now been followed by a lower low. That scattering does not an uptrend make. In form, its recent fluctuations resemble two-thirds of a head-and-shoulders top. Should the Index make a lower high when it next turns upwards, the bell is tolling for its countertrend rise. As a side note, its Moving Average Convergence-Divergence lines (found at the top of its chart) are very close to making a bearish cross.

With the last full week of May over, gold is showing a fairly solid recovery. The beginning of May was the time to sell, but gold hasn't gone away as yet. Given that it's likely to either consolidate or fall further in the coming few months, due to unfavourable seasonality, this rally could be seen as a blooming second chance to get out. Its recovery strength, though, shows that it's angling more towards a summer consolidation than a summer correction.

In closing, I'd like to thank you for stopping by and reading what I've got here. Have a great weekend, and enjoy the heat.

Gold Rises Due To Sinking Greenback

The U.S. dollar tumbled last night, which gave enough energy to gold for it to rise above its sub-$1,520 close to $1,525. The greenback's action also boosted silver into a range between $37.50 and $38; WTI crude oil got a lift up to $101. After gold reached $1,525, around midnight ET, it stayed stuck around that level as the greenback recovered slightly. Fitch put another national government on negative credit watch, but not one in Europe. Japanese sovereign debt got that flag because debt levels are so high. Inflation in Japan for the month of April was reported as 0.6% from a year earlier, a shift from the no-inflation norm that's prevailed for the last two decades. Japanese GDP shrunk 0.9% in the first quarter of this year, making for a technical recession in the country since GDP also shrank in the fourth quarter of last year.

Gold did manage to make it as high as $1,529.90 around 4 AM, after recovering from a slump of as low as $1,522.20 just prior to that peak, but overall it stayed close to $1,525. As of 8:18, the spot price was $1,526.90 for a gain of $7.50 on the day. The Kitco Gold Index attributed -$2.70 to predominant selling and +$10.20 to a weakening of the greenback.

The U.S. Dollar Index, as noted above, plunged from the high 75.5s all the way down to 74.95. The tumble ended just before midnight, after which it snapped back to 75.05-75.15. After gaining enough strength to climb up to 75.35, it reversed and reintroduced itself to a sub-75 level. As of 8:25, it was still sinking at 74.97.

A Reuters report ascribed gold's recovery to safe-haven buying and a weaker greenback.

"The dollar is weaker, boosting commodities," said Peter Fertig, a consultant at Quantitative Commodity Research. "Also don't forget the situation in the euro zone, especially the latest comments from an EU official."

In the latest development on the Greek crisis, the head of euro zone finance ministers Jean-Claude Juncker said the International Monetary Fund could withhold the next slice of aid to Greece due next month.

"The chances of debt default by Greece are rising," a trader said, adding higher oil prices were also helping gold.

Holdings of the SPDR Gold Shares Trust stayed steady again at 1,214.08 tonnes.

8:30 saw the release of the consumer-spending report for April. Spending was up, but only by 0.4%: the same as income. Spending was hobbled by price rises, like at the gas pump, which are excluded from the core-inflation figures. Gold has already got a head of steam up, rising to the high 1520s on the sinking greenback, but the release of that report gave it a final boost that pushed it above $1,530. As of 8:42, the spot price was $1,530.30 for a gain of $10.90 on the day. The Kitco Gold Index assigned -$1.25's worth of change to predominant selling and +$12.15's worth to greenback weakening. The U.S. Dollar Index halted its decline on the news, but didn't rise. As of 8:46, it was stuck at 74.99.

Thanks to renewed pressure on the U.S. dollar, gold managed to reverse its declines from yesterday and come close to making a new three-week high. Safe-haven demand ebbing from the greenback, and consequent selling pressure, has actually helped the metal instead of hurting. Today's regular session may see some volatility, as a strong start tends to be a bad predictor of the rest of the session. Even if so, gold will still have held up fairly well.

Gold Ends With Sizable Loss, Falls With Greenback Rise And Then With Oil

Gold started regular trading with a slump, but picked up smartly when the revised number for U.S. first-quarter GDP hit the Net. Instead of being revised upwards, as many had expected, the number stayed at 1.8%. Any upward revisions were cancelled out by consumer spending being revised downwards to 2.2% growth annualized from 2.7%. Despite that morning push, though, the metal ended up slumping because the U.S. dollar jumped up, albeit discouting most of the rise in advance. When the greenback fell mostly back down, gold didn't benefit because crude oil slumped and gold was dragged down with it. More broadly, profit-taking dovetailed with diminished safe-haven demand to leave the metal sporting a loss on the day that was more than six dollars an ounce.

After being boosted by the GDP revision disappointment, the metal reached $1,526 at 9 AM ET as the greenback was pushed down by the news. Despite the fact that the currency didn't trough until almost an hour later, gold was blocked from rising any further as selling pressure came in. The metal actually tumbled before the greenback had finished jumping up from 75.35 to as high as 75.86. While the currency was making most of its run, gold snuck upwards in a rising channel below $1,520; as noted above, the metal discounted the rise before it was complete. When the U.S. dollar began slipping, the metal didn't react all that much to the upside at first. Evidently, the gold market had a more optimistic view of the greenback's performance than what actually transpired.

It wasn't until the greenback slump turned gentle at 75.6 that gold got enough energy to hoof up to $1,525. Then, it slipped and then slowly slid downwards for the rest of the afternoon. Not only profit-taking slipped it down but also a drop in WTI crude oil, which ended up at $100 from $100.75. Although the metal was supported at $1,520, the gentle pressure on it pushed it below that level near the end of the session. As of the close, the spot price of gold was $1,519.40 for a drop of $6.40 on the day. The Kitco Gold Index attributed -$13.60 to predominant selling and +$7.20 to a weakening of the greenback.

Gold's six-month chart, from Stockcharts.com, shows it declining for the second day in a row:



Despite that decline, gold's Moving Average Convergence-Divergence lines (found at the bottom of its chart) made a bullish cross today. It wasn't much of one, and that indicator tends to be a little late rather than early, but that cross shows that gold's weak uptrend is real. The metal bottoming at any price above $1,490 or so will make for a third higher low, which will further confirm that it's doing a little better than a straight consolidation. Despite the Eurocrisis-related safe haven demand coming in, that demand is iffy and not consistent. Gold won't be given a big boost by it unless another disaster erupts, like the Grecian government seriously threatening to default or unilaterally reschedule. The latter now sports the euphemism "reprofiling."

Turning to the U.S. Dollar Index: it was knocked down by the GDP news, slumping from the high 75.5s down to as low as 75.35. After a relief climb, it sunk again but double-bottomed. Then, it got its energy back and climbed above 75.85 by 11:00. Then sinking and topping at a slightly lower level, it turned south in early afternoon and slid into the 75.5s. For most of the afternoon, it was between 75.5 and 75.6 - about where it was before the GDP revision was released, making the regular trading session a wash for the currency. As of 5:15, it was recovering from a slump down to 75.505 to reach 75.54.

Its own six-month chart, also from Stockcharts.com, shows it declining for a third day in a row:



In so doing, it made its uptrend weaker and made my previous call for it to touch 76.5 before the end of the week unlikely. I have to say that I got too optimistic earlier this week. Although the Index sunk below 75.5 today, there was enough support at that level to push it above. The last short-term bottom was at 75.0. Should the Index keep declining and close at 75, its intermediate-term uptrend will become questionable.

Gold didn't make a fine show today, but declines come with the advances. Considering that its close today is almost exactly at a resistance level it would have been stopped at had it been merely consoldiating, today's decline can be taken as a sign that its short-term advance is weak but real. Since it's in decline mode, it may go farther - but it would have to bottom around $1,480 for its short-term uptrend to be impugned. The metal has a long way to go before sliding down that low; it likely won't. Tonight's overnight session may see more softening, but nothing alarming should take place.

Despite Fall In Greenback, Gold Slumps Along With Silver

After peaking at about $38.75, silver lost more than a dollar and a half an ounce. Shortly after it began tumbling, gold did too. Despite the fact that gold didn't follow silver up by that much, the former metal followed the latter down when it got sold off. During the sell-offs, the U.S. dollar stayed in a range that was well below yesterday afternoon's values. The OECD recommended that most central banks raise their rates due to inflation pressures, now that the global recovery looks self-sustaining. It upped its inflation forecast for this year from 1.5% to 2.3%, and it urged the Federal Reserve to raise the Fed Funds rate to 1.0-1.25% by the end of this year. Jean-Claude Trichet's successor in November as President of the European Central Bank, Mario Draghi, is already advertising his credentials as an inflation-fighter.

Thriving on the greenback's slide, gold climbed a few dollars last night in a steady rise that extended as night turned into morning. From $1,526, its climb took it to a peak of $1,533.50 at about 2:30 AM ET. At that time, silver had already lost about twenty-five cents an ounce. Then sold off with silver, gold tumbled steadily without much recovery climbing until it reached a bottom of $1,514.60 a little after 7:30. A relief climb kicked in, but the metal had trouble reaching $1,520. As of 8:22, the spot price was $1,519.20 for a drop of $6.60 on the day. The Kitco Gold Index attributed -$13.20 to predominant selling and +$6.60 to a weakening greenback.

The U.S. Dollar Index, after a brief climb from 75.9 to almost 76.0, turned around last night and slid down to 75.6. It then entered a range between 75.67 and 75.5, whose top lowered to 75.6. As of 8:25, it was at 75.56.

A Reuters report said gold was knocked down from a three-week high by silver's plummet. The euro was strengthened by a report that claimed the government of mainland China was interested in buying Portugese government "bailout bonds."

"This is a major intraday reversal of some 8 percent, the potential right now is that we see one step forward and two steps back in silver and I think it can continue," said Commerzbank analyst Eugen Weinberg.

"The real problem is the price increase before was overdone and the market was overheated... speculative investors have not yet exited (their positions)," he said, adding: "This is a situation where the tail is wagging the dog."...

"We are in for a prolonged period of prices treading water and probably stagnating at around $1,500. I wouldn't be looking for as much positive dynamic going on, despite the demand for it as a safe-haven right now being fueled by the debt crisis," Commerzbank's Weinberg added.

Metals consultancy firm GFMS forecast that mainland China's imports of gold may be as high as 400 tonnes this year, as compared with 200 tonnes for last year. Holdings of the SPDR Gold Shares Trust remained at 1,214.08 tonnes yesterday.

A Wall Street Journal report said gold slumped along with silver, and noted that buying support might take lower levels to kick in definitively.

"Buyers of physical bullion from the Middle East and Asia have eased back on this run up to $1,530/oz in gold and we will need to see a more sizeable correction for them to come back in a big way," said Tom Kendall, vice president of commodities research at Credit Suisse.

However, confidence in gold's longer-term prospects remain high.

A European parliamentary committee voted unanimously to allow clearing houses to accept gold as collateral, bringing the metal closer to use as an alteranate currency. Although the measure has yet to be approved by the European parliament and the Council for the European Union, it's a step forward.

The weekly initial jobless-claims number came out, rising 10,000 to 424,000 for the week ending last Friday and confounding expectations for a mild decline. The number for the prior week was revised upwards by 5,000 claims. However, the total number of claimants receiving unemployment compensation dropped to a two-year low. Of more import was the Q1 revision for U.S. GDP growth. Despite expectations for an upwards revision, the number remained steady at an annualized 1.8%. Consumer spending growth was revised downwards, from 2.7% to 2.2%.

After slumping from around $1,520 to $1,517 when the pit session started, gold shook off its doldrum and jumped on the news. $1,520 was cleared easily. As of 8:49, the spot price was $1,523.60 for a drop of $2.20 on the day. The Kitco Gold Index assigned -$12.30's worth of change to predominant selling and +$10.10's worth to greenback weakening. The U.S. Dollar Index broke through the bottom of its range on the news, plunging to almost 75.35 before bouncing back. As of 8:51, it was still boucing at 75.40.

Gold did have a rough time in early morning, but it managed to best $1,520 again on the GDP news. Since it had put in a fair gain before its tumble, the loss on the day turned out to be not that bad. This regular-trading stretch may be volatile, but gold has a good chance of keeping its head above $1,520 when the day is done.

Gold Ends With Miniscule Loss, Outpaced By Silver And Oil

Despite breaking above $1,530 on a weakened greenback, gold didn't hold onto its gains for today; it closed on the downside but almost even. With this action, it differed from two other commodities more linked to economic performance. WTI crude oil jumped two dollars in regular trading to close at a little above $101, while silver continued climbing strongly: it gained more than $1.25/oz. The rebounds in both are the result of an impression that commodities in general have been sold off too much, which gold did not participate in because it cratered far less at the beginning of this month. The safe-haven demand that exists for the metal is still tepid, while more industrial-related commodities are rebounding smartly.

Gold started off regular trading with a slump from the high 1520s to $1,523. After rebounding at 9 AM ET, it then fluctuated between $1,526 and $1,529. A weakening greenback induced the metal to run up to a daily peak of $1,533.50, which was reached at 11:45. From that peak, the metal was hit by a selling wave that pushed it back down to $1,523. A slight recovery in the greenback was only partially responsible for the tumble.

After that sell-off proved to be overdone, the metal entered into a range between $1,525 and $1,528. It was tested on the low side a few times, but it held up. By the end of the session, the metal had drifted to the low end of the range and long given up its gains from the morning. As of the close, the spot price of gold was $1,525.80 for a drop of $0.30 on the day. The Kitco Gold Index split the loss into -$0.15 for predominant selling and -$0.15 for a strengthening greenback.

Gold's six-month chart, from Stockcharts.com, shows that today was a wash:



Today's slight decline put an end to the last three trading days' gains. I thought that the metal's Moving Average Convergence-Divergence lines, found at the bottom of its chart, would make a bullish cross today. They didn't, although they was close. After its recent gains, given that its short-term uptrend is weak, today's pullback wasn't all that disappointing. Gold did break $1,530, but it failed to hold on. As a support level, $1,520 was not breached.

As for the U.S. Dollar Index, it managed to pull up to 76.15 early on in regular trading but sunk to below 75.75 between 10:25 and 11:50. After doing so, it recovered partially but had trouble geting up above 75.95. In later afternoon, it settled around 75.9 and drifted. As of 5:15, it was still drifting along at exactly 75.90.

Its own six-month chart, also from Stockcharts.com, shows its early-morning recovery cancelling out:



The Index's pullback in yesterday's and today's trading is little more than a dip in a still solid intermediate-term uptrend. Although it's weakened recently, and despite the fact that its long-term trend is downwards, the safe-haven demand for the greenback due to the Eurocrisis means there's a good chance the Index will pull higher. Unfortunately or no, the U.S. dollar is still getting the bulk of the safe-haven demand. It hasn't challenged 76.5 yet, but there's still a good chance it will by the end of the week.

Despite being outpaced by other commodities like silver and copper, gold is still doing well given the greenback's strength. If the script for this flare-up of the Eurocrisis follows the original from last year, safe-haven demand will go largely to the greenback at first. Only later did gold pick up the bulk of safe-haven buying. This current flare-up might not last that long, as a bailout mechanism is already in place: if so, then the greenback will likely sink. Gold's weak short-term uptrend may turn into another consolidation.

Gold Drifts As Greenback Stays Steady

The greenback made a comeback last night, which hardly affected gold. WTI crude oil was affected more: it slumped from $100 to $98.25 before recovering. Gold only slipped to a little below $1,525 before heading back up again. Silver continued its strong run this morning, but gold didn't really follow. The yellow metal merely reversed last night's losses, after being pushed down a little more by an even stronger greenback aqround 2 AM ET. The news that Goldman Sachs reduced its growth forecast for mainland China's economy, largely due to weaker data and higher inflation pressure, didn't affect the metal. As of 8:07, the spot price of gold was $1,526.70 for a gain of $0.60 on the day. The Kitco Gold Index attributed +$2.70 to predominant buying and -$2.10 to a strengthening of the greenback.

The U.S. Dollar Index, as indicated above, reversed yesterday's slumping and jumped up last night. Peaking at 76.2 around 9:50 PM, it then slid to 76.05 but managed to get its footing back around midnight; it climbed to 76.25 a couple of hours later. Pacing at around 76.2, it later stumbled and sunk back to around 76.0. As of 8:14, it had began to inch up again to reach 76.03.

A Bloomberg report attributed gold's slight gain to the continued woes of the Grecian government and its likesake.

“Market participants remain nervous about peripheral debt troubles in the euro zone,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said today in a report. “Gold will remain well-supported in the short-term.”

Christian Noyer, a Governing Council member of the European Central Bank, nixed a restructuring of Grecian sovereign debt because such a restructuring would make it hard for that government to borrow for the next few years.

A Reuters report said that gold hit a three-week high because of Eurocrisis fears. (It did, albeit briefly.) The same reason was given for the greenback's rise.

"It's balancing debt problems against the impact it's having on the euro versus the dollar," said Daniel Major, analyst at RBS. "Underlying physical demand in Asia is relatively resilient."...

Major expects to see gold consolidating around current levels: "Unless we get some sort of macro event that pushes the currency well out of its current trading range or limits safe-haven flows".

For the longer-term however some analysts expect to see gold make further gains on mounting concerns about inflation, against which gold is used as a hedge.

Inflows into ETFs are being taken as a sign that investor interest in gold is on the rise again. Holdings of the SPDR Gold Shares Trust rose 4.55 tonnes yesterday, to 1,214.08 tonnes. They've risen 22.74 tonnes above the one-year low hit one week ago.

A Wall Street Journal report said that gold was flat as it sought direction from the currency markets and risk tolerance.

"Both gold and silver are looking to consolidate, and currency moves are quite an important factor," said Royal Bank of Scotland analyst Daniel Major. "The impact that euro-zone sovereign debt concern is having on the euro-dollar cross is a key driver."

Gold has benefitted from recent risk aversion caused by the sovereign-debt downgrades or negative watches for Greece, Italy and Belgium.

The April durable-goods number was released at 8:30: it showed a larger-than-expected 3.6% drop. That fall was mostly due to lower demand for autos and aircraft. The magnitude of the drop was slightly exaggerated by an upward revision of March's increase, from 4.1% to 4.4%. Gold, after slumping to $1,525 at the start of the pit session, briefly stumbled on the news but recovered. As of 8:39, the spot price was $1,526.30 for a gain of $0.20 on the day. The Kitco Gold Index assigned +$1.10 for predominant buying and -$0.90 for greenback strengthening. The U.S. Dollar Index, after reaching 76.05, also slumped on the news but didn't snap back. As of 8:43, after sinking as low as 75.89, it snuck up to 75.94.

Gold didn't do much this overnight session, but it showed a fair bit of resilience given the greenback's earlier recovery. Silver's been outpacing it, but that's largely because the gray metal fell much farther during the plummets three weeks ago: gold's been recovering less because it lost less. For today's regular trading, $1,520 looks safe and $1,530 might be touched.

Gold Ends Day With Decent Gain, In Part Because Of Sinking Greenback

This time, silver joined gold in rallying even though the greenback was largely stable during the day. The gray metal put on more than $1.50 in a strong rally, while gold's rally was more modest: both benefitted from a Goldman, Sachs upgrading of the commodity sector. WTI crude oil also gained, closing just below $100. Gold, despite its relatively lackluster gain, held its ground above the $1,520 resistance level and closed above $1,525.

The metal was sluggish at the start of regular trading, hovering just above $1,520 and testing it on the downside. Earlier, it forged above $1,520 on some weakness in the greenback; the currency fell below 76.0, and stayed slighly below that level today. Shortly before 9 AM ET, the metal shook off its doldrums and climbed up to $1,529.40 before falling back to $1,527-8. It slipped at 10:30, to below $1,523, and its recovery took it to a lower peak. The stage was thus set for a decline to $1,521, reached just before 1 PM.

Then, the metal trundled back up to the high 1520s after being blocked at $1,525. Slipping back to $1,524 in later afternoon, it managed a last-hour hoof-up that peaked at $1,527. Had it not been for a last-minute slip, gold would have been on the verge of a double-digit gain. Instead, the spot price closed at $1,526.10 for a gain of $8.90 on the day. The Kitco Gold Index split the gain into +$4.50 for predominant buying and +$4.40 for a weakening greenback.

Gold's six-month chart, from Stockcharts.com, shows it gaining for a third day in a row:



In so doing, it managed to poke up above the resistance level that stymied it yesterday. It's managing to shake off the near-correction that visited it at the beginning of this month, aided by new flare-ups of the Eurocrisis. Gold's Moving Average Convergence-Divergence lines, found at the bottom of its chart, are getting close to a bullish cross and look like they'll do so tomorrow. Gold's still too top-heavy to shake off those plummets of three weeks ago, but it's established a weak short-term uptrend with a slightly higher high and higher low. It's not exciting, but it is encouraging.

The U.S. Dollar Index did little in today's regular session. A slight downward drift from the start of the session to late morning, which bottomed well above 75.8, gave way to a climb that peaked at just above 76.0. Failing to sustainably climb above 76, it descended to 85.81 but climbed most of the way back in later afternoon. As of 5:15, it had slumped to reach 75.91.

Its own six-month chart, also from Stockcharts.com, shows today's decline erasing most of yesterday's advance:



Most, but not all. Although the Index was flummoxed today, its intermediate-term uptrend is still intact. Lately, it's been the beneficiary of Eurocrisis-related safe-haven buying to a greater extent than gold. Although not being able to reach 76.5, it may make another try for that level by the end of this week.

Gold breaking above $1,520 is a good sign, as it established a weak uptrend. Given its run in from late January to the end of April, and the excitement that accompanied its record-setting peak at $1,578.20, a weak uptrend is more than can be reasonably hoped for. Normally, the metal consolidates for as long as several months after such a run. Moreover, gold's summer seasonality isn't that good. Should the metal manage to get above $1,540, its short-term uptrend will be more than a relief rally - but, given its usual habit of resting after an intermediate-term run and its tendency to stumble down in the summer, it current record will likely hold for a fairly long time.

Gold Reaches Record High In Pounds As Well As Euros

Last night, gold made a record high in Euros: 1,081.43 per ounce. It also made a record high in pounds, although its current record is not much above the previous record.

Gold has had a period of correction and consolidation in sterling (see chart) and indeed in all currencies in recent months. Even with gold at record sterling highs at GBP 942/oz and after the recent gradual gains, gold is only some 14% higher than 12 months ago and only some 3% above the record nominal highs (GBP 914.77/oz ) seen at the end of December 2010 – nearly 5 months ago.

Such gradual gains are hardly indicative of “irrational exuberance”, an investment mania or a speculative bubble.

The gains are also gradual in the Euro. Last night's record wasn't much above the old record set in the midst of the Eurocrisis about a year ago. A lot of gold's gains in greenback terms come from the depreciation of that currency.

Gold, Aided By Weakened Greenback, Climbs Above $1,520

Gold, no longer ignoring the greenback, poked its nose above $1,520 early this morning after being pushed down by the rising currency last evening. Slumping below $1,515 as the U.S. dollar rose, it turned around and settled into a range between that level and $1,518 for the rest of the night. It climbed above the range starting at 3 AM ET, and managed to get as high as $1,524.70 before losing its momentum and slumping back to the $1,520 level. Both silver and WTI crude oil advanced in the same timeframe too, the latter reaching $99. As of 8:14, the spot price of gold was $1,521.50 for a gain of $4.30 on the day. The Kitco Gold Index split the gain into +$0.80 for predominant buying and +$3.50 to a weakening greenback.

The U.S. Dollar Index, after sailing up to a peak of 76.36 at 8 PM, choppily slipped and scrambled for an uneven but overall decline. Not stopping until it troughed at below 75.85, it managed to halt its slippage at 7 AM and move into a range. As of 8:20, it was travelling sideways at 75.96.

A Bloomberg report said gold gained on safe-haven buying prompted by Euroland-related worries. Gold made a new record high in Euro terms as Fitch downgraded the Belgian government's debt and the Grecian government approved more asset sales as part of a new aid-garnering austerity package.

“Concerns over the ability of euro-zone peripheral nations to contain their debt continue to intensify,” James Moore, an analyst at TheBullionDesk.com in London, said in a report. “We expect further dip-buying to underpin gold.”

Standard & Poor’s GSCI Index of 24 commodities is rebounding too.

An earlier Reuters report gave the same reasons.

"The market is so unsure as to what the outcome of all the various meetings that are going on in Europe, whether or not they are going to come to an agreement for restructure or some other kind of means of dealing with it," said Darren Heathcote, head of trading at Investec Australia.

"We've yet to find out."

Holdings of the SPDR Gold Shares Trust rose yesterday by 7.58 tonnes to 1,209.53 tonnes, building on Friday's larger gain of 10.61 tonnes. Those gains make for a snapback from a one-year low.

A Wall Street Journal report said gold crept upwards because of the weaker greenback and Euroland-related worries.

As long as jitters over sovereign debt in the euro zone remain, gold should continue to benefit as a perceived hedge against insecurity, market players said.

"We would keep an eye on gold's ratios against other precious metals, as bullion could well start breaking away from the rest of the commodity complex with tensions building up over peripheral debt troubles in the euro zone," said VTB analyst Andrey Kryuchenkov.

Still, there's some caution abut gold's fate becuase the Fed is ending QE2 and may turn hawkish later this year.

With regular trading up and rolling, gold stayed just above $1,520 with a brief dip below at 8:30; essentially, it moved sideways just before and after the start of the pit session. As of 8:40, the spot price was $1,520.10 for a gain of $2.90 on the day. The Kitco Gold Index attributed the entire gain to greenback weakening. The U.S. Dollar Index continued moving sideways just below 76.05. As of 8:42, it was coming off 76.0 at 75.98.

Gold did manage to successfully test $1,520 this overnight session, and so far is barely holding above that level. It may sink below today, despite staying above for several hours, because $1,520 is a resistance level and the metal's in consolidation mode. If the greenback resumes its downtrend, the metal will clear that resistance level and continue inching up. It managed to make a new record high in Euros, showing that it still has a fair bit of strength.

Gold Shakes Off Early Loss, Strong Greenback To Close With Small Gain

Gold closed with a mild gain, benefitting in a small way from safe-haven buying today. It was sparked by worries about the Euroland economies, and governments' debt therein. Also causing worries were the lackluster performances of Indian, mainland Chinese and American equities. The prime beneficiary of safe-haven buying has been the greenback, though: it closed with a strong gain, although weaker than at its morning peak. WTI crude oil was down slightly, closing around $97.50. Silver managed to climb barely above $35, suggesting that the gold-related safe-haven buying was prompted by inflationary fears. Those inflation fears were not enough to help oil.

Until 8 AM ET, gold was desultorily rambling around $1,510. At that time, the metal slipped down to $1,504 and regained its traction slowly. At 8:45, it broke the jinx and leapt up to $1,512 before sliding back and then ascending in a less ragged fashion until it hit $1,514 at 10:30. A pullback in the greenback aided its climb. Then slipping to $1,510, it bottomed there and then managed to jump back up to $1,514 again.

One more climb was in store for it in mid-afternoon, but the metal only gained a few dollars as a result. From 2 PM 'til the end of the session, it stayed in an intraday range between $1,516 and $1,518 as the greenback settled into a lower range of its own . As of the close, the spot price of gold was just above the middle of its range at $1,517.20; it gained $3.70 since Friday's close. The Kitco Gold Index attributed +$13.40 to predominant buying and -$9.70 to a strengthening greenback.

Gold's six-month chart, from Stockcharts.com, shows the metal moving up to near the top of its now-established short-term trading range:



Today's gain was much less than last Friday's, but gold did build on Friday's accomplishment instead of sliding back. The metal's moving near the $1,520 resistance level, which it unsuccessfully tried to penetrate on May 11th. Its Moving Average Convergence-Divergence lines, found at the bottom of its chart, are still in a bearish configuration but are getting closer to a bullish crossover. Although gold's performance has been salutary, significantly so given the greenback's strength, it's going to have some trouble sustainably crossing $1,520. Given the safe-haven buying that's arising, it may try.

As for the U.S. Dollar Index, it did slump back during regular trading but it managed to hold on to most of its gains from the overnight session. After topping at slightly above 76.35 just after regular trading began, it first hesitated then pulled back to 76.1. Trying to regain its upward climb in late morning, it topped out at a slightly lower level and then fell back to below 76.2. Slumping more in mid-afternoon, it bottomed well above 76.0; that support level wasn't even tested. In late afternoon, with gold not reacting, it inched up to a little below 76.15 and tested that level without resuming its climbing. As of 5:15 PM, it had slipped a little to reach 75.14.

Its own six-month chart, also from Stockcharts.com, shows its strong leap with respect to last Friday:



Like gold, the Index gained for the second trading day in a row. Unlike gold's, today's Index gain was stronger than last Friday's. Having backtracked to 75.0, the Index took the pause there as encouragement to climb to a height unseen since early April. Its upward trend is definitely intermediate-term. The Index's Relative Strength Index, found at the top of its chart, is approaching the 70 overbought level. Only a few weeks ago, it was outright oversold. The driver for the greenback is fear, particularly Eurozone-related fear, which has encouraged safe-haven buying. That climate of worry are what's enabling the Index to power upwards with gold gaining too.

As the week's first day ends, the metal is in a fairly strong position. Last week saw it busting of a symmetrical triangle, a chart pattern that is supposed to augur a continuation move. (In gold's case that would have been further plummeting.) Now, it's nearing a test of the $1,520 resistance level. If inflation-related fears keep building up, it could touch that level in the coming overnight session. My earlier fears of it testing $1,500 today proved to be groundless, indicating that it's become fairly good at shaking off snap declines. Only time will tell how much of the greenback safe-haven buying will either spill over to or be crowded out by gold. Perhaps they both will keep rising in the coming days, as they did when the Eurocrisis first erupted.

Gold Slumps A Little, Partially Ignores Stronger Greenback

After an initial jump when trading resumed for the week, gold slumped from above $1,517 down to around $1,510 last night. The routing of Spain's ruling Socialists in local elections had an effect on gold's strong start. Despite the greenback rallying strongly through the overnight session, and WTI crude oil slumping more than two dollars, gold stayed stuck around $1,510 as selling pressure due to the stronger U.S. dollar was balanced by safe-haven demand. That demand came from the ticking-over Eurocrisis and worries about inflation in mainland China and India, which sent stocks in both countries reeling. As regular trading approached, though, the stronger greenback began to take its toll on gold. As of 8:12, the metal had slumped from its $1,510 centre to reach $1,506.40; the loss since last Friday's close was $7.10. The Kitco Gold Index attributed +$3.65 to predominant buying and -$10.75 to a strengthening greenback.

The U.S. Dollar Index, as indicated above, spent most of overnight rallying. Unusually, the Index jumped about a tenth of a point right from the get-go to as it started off the week fluctuating between 75.7 and 75.8. Staying in that range until just before 7 PM ET, it first hoofed up to 75.865 and then slipped back into the range. Regaining its footing, it climbed steadily, breaking through 76, until topping at 76.365 around 5:20 AM. Then sliding back to below 75.2 as it lost energy, it resumed climbing once again. As of 8:22, it took a junp to 76.31.

A Bloomberg report said gold may end up gaining on European soverign debt woes, as Standard and Poor's cut its outlook for Italian government debt from neutral to negatve and Fitch's cut Grecian government debt to four notches below investment grade.

There’s “fresh safe-haven demand as the situation facing Greece and other peripheral euro-zone nations and U.S. budget negotiations this week prompt further investment diversification,” James Moore, an analyst at TheBullionDesk.com in London, said in a report.

The U.S. Treasury threatened the House by saying that the U.S. government would default by August 2nd unless the debt ceiling was raised. Holdings on gold ETFs tracked by Bloomberg rose 9.55 tonnes to 2,045.56 tonnes last Friday.

An earlier Reuters report gave essentially the same reasons for gold's earlier stability despite the stronger greenback: safe-haven demand prompted by European sovereign debt woes.

"I would expect gold to be supported above the $1,500 level. If the crisis starts to involve other nations beyond Greece, then we could see gold heading to a new record high," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.

The Asian physical market saw some bargain hunting by jewelers, but trading was subdued. Premiums on gold bars stayed moderate; Indian buyers were largely on the sidelines. Holdings of the SPDR Gold Shares Trust jumped by 10.61 tonnes to a still-low 1,201.95 tonnes.

A Wall Street Journal report also concurred, but noted that physical buying provided support despite gold drooping.

Physical buying has been proving a key support, analysts said, as fears over the financial health of some European governments, and particularly the outlook for debt-ridden Greece, prompt investment diversification.

Despite gold's hidden strength, analysts still expect the greenback to be the main mover of the metal.

With no new U.S. economic data to move it, gold's slump ended at $1,504 just before the pit session started. The start of regular trading saw a modest bounceback with support coming in at $1,505. As of 8:41, the spot price was $1,505.10 for a drop of $8.40 since Friday's close. The Kitco Gold Index assigned +$4.80's worth of change to predominant buying and -$13.20's worth to greenback strengthening. The U.S. Dollar Index, after its earlier leap, stayed steady. As of 8:44, it was shuffling around at 76.32.

Gold's steadiness was eroded just before the pit session got rolling, but it's still comfortably above $1,500. That level may be challenged today, as the higher greenback may still encourage selling pressure, but the metal's still held up well desite the U.S. dollar's strength.

Gold Defies Greenback, Rockets Up For Nearly Twenty-Dollar Gain

The U.S. Dollar Index made a nice gain today, enough to reverse the last three days of declines. Given how well the greenback did, one would expect gold to be swacked. There were times when it was, but the metal managed to defy the rising greenback to rocket above $1,500 and even $1,510 before noon ET. Staying above the latter level for the entire afternoon, the metal closed with nearly a twenty-dollar gain on the day.

One report ascribed gold's rocket-up to safe-haven buying, prompted by weakness in U.S. equities and some trouble spots in the Eurozone. That safe-haven buying would have benefitted both it and the greenback, as was the case when the Eurocrisis sprung to the surface. Evidence of continued strong mainland Chinese demand also helped: in the first quarter of this year, mainland China eclipsed India to become the #1 consumer nation of gold.

There's another explanation. This morning before regular trading started, Dennis Gartman said gold's performance looked encouraging and he was adding to his gold positions. If the "Soros effect" can bobble the market, then it's not all that unreasonable to conclude that the Gartman effect aided gold. Silver did not participate in a similar rally; it closed about where it opened today. WTI crude oil did shoot up in late morning alongside gold, but that run was only a recovery rally that erased an earlier plummet caused by the greenback rally. It closed just below $100, less than a dollar above its average late last night. Only gold had a rally that added to a prior small gain, despite threats to that gain along the way.

The metal's gain on the week was slightly lower than its gain for today: $18.30, or 1.22%. Had gold closed where it opened, the weekly gain would have been miniscule.

This morning, gold was especially volatile. Starting in the high 1490s when regular trading began, it climbed to $1,503 by 9:00 but slipped down when the greenback shook off a decline and rallied strongly from 75.3 to 75.75. The pressure the greenback put on the metal was such that gold sunk to $1,490 by 10:00. That bottom took place in the middle of the U.S. dollar's rally: it was at 10:00 that gold started to defy the greenback.

Initially advancing slowly, to $1,495, the metal's performance in the greenback headwind got enough attention to prepare it for a spectacular run once the U.S. dollar faltered and gave up its mid-morning gains. From 10:45 to 11:30, gold zipped up to $1,515 despite the greenback's fall being only partially complete. As a result, the rest of the currency's tumble didn't affect gold. Nor did a later rise back up to above 75.6. From 11 AM to the end of the the trading week, gold was "above it all" as it stayed in a $1,510-$1,515 range that hardly was tested on either side. The greenback's volatility in those hours didn't matter to the metal.

As of the last close of the week, the spot price was $1,513.50 for a gain of $19.70 on the day. The Kitco Gold Index attributed an unusually large +$30.60 to predominant buying and -$10.90 to a strengthening greenback.

Gold's six-month chart, from Stockcharts.com, shows the indecisiveness of recent days being broken today:



In so doing, it made the earlier symmetrical triangle chart formation a dead letter. According to chartist lore, the symmetrical triangle is supposed to signal a continuation of the prior move. In gold's case, that would have been another rout. The sign that the symmetrical triangle wasn't all it was cracked up to be came with the Soros tumble last Tuesday, which reversed itself instead of triggering more drops. Now, gold's action is consistent with a regular trading range, between about $1,480 and $1,520.

As for the U.S. Dollar Index, it had a wild ride too; its volatility was largely upwards. At the start of regular trading, it was struggling around 75.37. After sinking a little, while jumping and sliding, it got its legs going at 9:20 AM. Accelerating and then decelerating, it topped at 75.77 before sliding and losing all the ground it has made in that morning run. Bottoming at 75.3 around 1:45, more than two hours after gold entered its above-it-all range, the Index got its energy back and headed for the same height it had touched in late morning. At its 4:20 PM top, it skidded after touching 75.735 but not enough for it to cede 75.6. At the end of the week, it closed at 76.64.

Its own six-month chart, also from Stockcharts.com, shows it racking up a nice gain today:

As noted above, today's jump was enough to reverse its last three days of losses. The Index is approaching the same level that confounded it early this week - namely, 76.0. It's not there yet, but it's within a good day's run from that level. Should it fail to climb above 76.0, it'll likely settle into a trading range.

Although the first four days of the week netted out to a wash, today's run made for a great end to a good week. Gold confounded the chartists by moving into a trading range, establishing a consolidation pattern. It broke above $1,500 easily today. Given the range-like character of its recent trading, $1,520 is going to be a tough level to rise above. There's also the chance of a letdown drop when the week starts. Still, gold ending the week above $1,510 shows there's still pockets of demand that just need the right trigger to be activated. The risk of a continuation of the early-May rout is now low.

In closing, I'd like to thank you for stopping by and seeing what I've got to write. Have a great weekend: enjoy the glow while it lasts.

Gold Briefly Breaks Above $1,500, Sinks Back On Stronger Greenback

Last night, gold snuck up to $1,495 and stayed there. As night turned into morning, as encouraged by a weakening U.S. dollar, the metal broke out of that zone and began climbing. After bumping against $1,500 and pulling back, it jumped above $1,500 just before 4 AM ET and zipped up to $1,505.70. Unfortunately, that level marked the peak for the overnight session. The metal then unevenly slipped back until just before 5:30, when a leaping greenback pushed it down below $1,500 to where it was last night. As of 8:07, the spot price was $1,496.20 for a gain of $2.40 on the day. The Kitco Gold Index attributed +$8.10 to predominant buying and -$5.70 to a strengthening greenback.

The U.S. Dollar Index, as indicated above, sunk last night after an early-evening rise that gold ignored. Starting off the overnight session at 75.1, it climbed up to 75.2 at 9:10 but then sunk for the next four-and-a-half hours. Reaching 75.05, it turned up but sunk below 75 at the same time gold made it above $1,500. Stabilizing around 75.0, it moved sideways until it took off like a shot at 5:15. Two-and-a-half hours later, it peaked at 75.475. Then exhausted, it slid back but later got the energy to start climbing again. As of 8:19, it had started to climb back at 75.38.

A Bloomberg report ascribed gold's earlier run-up to a weaker greenback and speculation that the Fed won't tighten soon.

Recent economic data may allow “policy makers some time before turning hawkish and admitting future liquidity curbs,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said today in a report. “This means limited downside in gold with the latest dollar rebound also running out of steam for now.”

Dennis Gartman is quoted as saying gold has held up well, and is cited as saying he'll be adding to his gold positions.

A Reuters report said that gold rose on the softer dollar and poor U.S. economic data, which prompted that speculation about Fed accomodativeness.

Data on Thursday showed a slowdown in manufacturing growth in the U.S. Mid-Atlantic region and an unexpected fall in existing home sales in April. That strengthened the view that if economic data continues to disappoint, it could delay Fed tightening until well into 2012 or later.

The dollar kept up a softening trend this week against the euro, which was also adding support to gold. "U.S. dollar weakness and uncertainty surrounding Greece's debt situation continued to be supportive," said ANZ in a note.

Holdings of the SPDR Gold Shares Trust, after dropping 1.61 tonnes two days ago, were steady yesterday at 1,191.34 tonnes. That level makes for a new year's low.

A Wall Street Journal report said gold was higher even though the euro was steady versus the greenback.

"We expect dull trading to prevail here given the thin macro agenda and quieter geopolitical front," said VTB Capital analyst Andrey Kryuchenkov, adding though that any downside would be limited, particularly with the latest dollar rebound "running out of steam for now."

Although there's still caution, there's some hope because the gold trade is less crowded after the wash-out two weeks ago.

With no U.S. economic data scheduled for today, gold rebounded after sinking below $1,495. Its jump started just after 8:00, and continued after the pit session started. Evidently, Dennis Gartman's words carried some weight. After touching $1,501 just before 8:30, gold pulled back a bit but stayed near $1,500. As of 8:42, the spot price was $1,499.10 for a gain of $5.30 on the day. The Kitco Gold Index assigned +$10.70's worth of change to predominant buying and -$5.40's worth to greenback weakening. The U.S. Dollar Index stopped climbing and settled into a period of indecisiveness. As of 8:45, it was inching up at 75.39.

Although the metal gave up its gains earlier this morning, its recovery to almost $1,500 suggests some optimism coming back. The beginning of the pit session isn't that good a foreshadower for the rest of the day, though; the rest of regular trading may see a slump. Even if so, gold's still showing real resilence in the face of a greenback recovery. If things don't go badly, it may sustainably break above $1,500 again.

Gold, After Sinking, Recovers Enough For Mild Decline; Helped By Sinking Greenback

After yesterday's decent gain, gold seemed primed to take out $1,500. Unfortunately, that happy outcome was not to be. Instead, after bumping against $1,500, gold ended up declining to the low 1490s and spending some time in the high 1480s. The sell-off was prompted by a temporary recovery in the greenback, but it was added to by the enthusiasm of yesterday going missing. Even though the U.S. dollar sunk below where it was yesterday, gold did not recover to yesterday's levels. Instead, it closed with a small loss while barely testing $1,495.

An earlier recovery in the greenback got the metal down to $1,490 before regular trading started. Climbing back to $1,493 before the pit session started, it got sold off and slipped down to $1,488 in the first hour of regular trading. Pushed up by the greenback sinking, it reintroduced itself to the low 1490s but only temporarily. By 11 AM ET, it has sunk to a new regular-trading low of $1,487.

Double-bottoming at that level shortly afterwards, it first jumped up but skidded back to $1,488 at noon. Then, propelled by the U.S. dollar's slide, it ascended to $1,496 but was sold off. Not being able to muster the strength to challenge $1,500, gold spent the rest of the afternoon in the low 1490s. After a later-afternoon run up to just below $1,496, it again lost energy and slipped down to its closing level. As of the end of regular trading, the spot price was $1,493.80 for a drop of $3.10 on the day. The Kitco Gold Index attributed -$8.90 to predominant buying and +$5.80 to a weakening greenback.

Gold's six-month chart, from Stockcharts.com, shows the metal coming to a near halt as if it were satisfied with where it was:



Another take on gold's pause is it doesn't know what it's going to do next. The action of the last few days is consistent with the economist's interpretation of the symmetrical-triangle chart formation: having been battered high and low, the asset veers in on a temporary equilibrium value and settles in around it. Chartists, who aver that a symmetrical triangle means a continuation of the move that preceded the formation, redraw the sides of the triangle when this equilibrization occurs. Gold's action in the last few days is consistent with the economists' take on the triangle. The gold market has evidently decided that the low 1490s is fair value for the metal, given what's known now. This settle-down doesn't mean that the chartists are wrong, though, as equilibriums don't last long in the gold market (if they show up at all.) Although there is a risk of a renewed downtrend, gold has managed to fend one off so far. Its Relative Strength Index, found at the top of its chart, continues to hover around the 50 neutral level. Not often do we see a quiet market, like what we're seeing now.

As indicated above, the U.S. Dollar Index lost its recovery momentum and slid from the 75.4 level it was at as of the start of regular trading. That slide happened at noon, and not before the Index rallied to 75.535. Sliding down at 9:10, it gained back half of the height it lost after bottoming at 75.25. Stymied at the level it was at when regular trading began, it slid again and tumbled to 75.1. From 12:45 to the end of regular trading, it drifted inconsequentially downwards; as of 5:15, it was still drifting at 75.09.

Its own six-month chart, also from Stockcharts.com, shows its short-term decline continuing:



Compared with its recent string of gains, those down days don't seem like much - but they add up. The Index is now only slightly above the level it reached after the first two days of its snap-back. it's still above 75, but it's edging towards a test of that level. That said, it still has a long way to go before reintroducing itself to the levels it was at when this month started. More likely is an upward reversal, as its performance right now is consistent with the Euro licking its wounds after being pummeled hard earlier this month. Assets that undergo that pummeling, like silver and gold have recently, have a hard time re-reaching their highs in the near term and often don't.

Despite gold disappointing today, given the greenback's fall, the metal is showing little inclination to resume tumbling. Support at $1,490 is spongy, and $1,485 does make for a more accurate near-term support level, but enough buying comes in when gold's below $1,490 to get it above again. Its near-term movement is neutral. Granted that it shows little inclination to resume rising, but few assets do after being swacked like gold was a couple of weeks ago. The metal looks like it's consolidating, which is not a bad outcome for an asset that's been poleaxed.

Gold Slumps Back On Climbing Greenback

Gold spent last night and the first couple of hours of this morning in the high 1490s, but a climbing greenback pushed gold down to the $1,490 level and, for a time, below. Sinking below $1,495 by 2 AM ET, and fluctuating around it for the next hour and a half, the metal skidded at 3:30 and then fluctuated around $1,490. Its overnight low of $1,487.10 was made at 5:30. Recovering later, it still stayed stuck below $1,495. As of 8:12, the spot price was $1,493.10 for a drop of $3.80 on the day. The Kitco Gold Index attributed -$4.25 to predominant selling and +$0.45 to a weakening greenback.

The U.S. Dollar Index ran up and slid down, but to little avail. Declining from 75.35, it sunk below 75.15 just before 11:00. It then got traction and ran up all the way back before pausing to catch its breath. It then ran to 75.5. Another slide-back preceded it peaking at 75.56. Afterwards, it lost strength and skidded back to below 75.25. Again climbing, it slipped back before reaching 75.45. As of 8:22, it was beginning to recover again at 75.35.

A Bloomberg report said gold declined on speculation that inflation is easing. St. Louis Fed President James Bullard said in an interview that the Fed may stay easy for the rest of the year because inflaiton expectations are moderating.

“Inflation expectations have been easing lately a bit,” Dan Smith, an analyst at Standard Chartered Plc in London, said today by phone. “Gold is looking for another reason to break higher. It lacks a trigger.”

Those expectations were gauged by 10-year Treasury Inflation-Protected Securities. The rate premium for fixed-rate Treasuries versus TIPS dropped to 2.36%, indicating an expectation for inflation to average that figure for the next ten years.

An earlier Reuters report said that gold steadied as the dollar softened.

"We are seeing signs of bottoming-out in gold as the dollar has weakened, but $1,500 remains a very contested level," said Li Ning, an analyst at Shanghai CIFCO Futures.

The World Gold Council reported that global gold demand rose 26% in tonnage terms to 310.5 tonnes in the first quarter of this year from the previous quarter.

A Wall Street Journal report said gold sunk on a higher greenback, although not by that much.

The near-term outlook for the yellow metal has been foggy in recent sessions, with the market's trading range relatively narrow as participants consider whether the market is ready for another push higher without a further correction in prices.

"We remain bullish on the market, however it seems some people are waiting for a bit more of a pullback before they act," a trader said.

The World Gold Council pinpointed Asia as the region where demand was exploding, although demand is increasing in North America.

U.S. jobless claims dropped to 409,000 from last week's report's 438,000; the latter figure was revised upwards. The drop was larger than expectations. Gold sold off as the pit session began, sinking to $1,490 before getting a bit of a boost from the jobless-claims news. That boost didn't last, as it sold down again to an even lower level. As of 8:43, the spot price was $1,489.90 for a drop of $7.00 on the day. The Kitco Gold Index split the loss into -$5.80 for predominant selling and -$1.20 for a strengthening greenback. The U.S. Dollar Index continued to recover, passing 75.4 again. As of 8:46, it was still climbing at 75.43.

Gold didn't have enough strength to seriously challenge $1,500, and its drop made for some disappointment, but its decline so far hasn't been all that bad. $1,490 seems to be holding, and it may continue to hold in today's regular trading. If the greenback continues to gain strength, though, then the metal will have a rough time.