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.

U.S. House Prices Drop 2.5% In First Quarter Of This Year

According to the Federal Housing Finance Agency, which based their conclusion on mortgages acquired through Fannie Mae and Freddie Mac, house prices dropped 2.5% in the first quarter of this year.

"In many local real estate markets, particularly those hit hard by this cycle, foreclosures and other distressed properties are still a key factor in recorded and anticipated future sales and may be delaying price stability or recovery. Fortunately, serious delinquency rates also are declining," said FHFA Acting Director Edward DeMarco.

The Agency also made changes to its methodology that had the effect of lessening the decline: had the old methods been in place, the drop would have been 3%.


Gold, after dropping to $1,523 at 9 AM ET, had climbed up to $1,529 just before this item was released. Climbs and falls of the U.S. Dollar Index influenced the metal's own ups and downs. The release time saw gold on its way down to $1,526, and the greenback rising from slightly below 76.0 to just above 76.1. Evidently, the U.S. dollar market saw it as good for the greenback - perhaps because it induces more safe-haven demand - and gold reacted accordingly.

Gold On Track To Become Official Mineral Of North Carolina

There isn't much of a gold-mining presence in North Carolina now, but that state was the first host of the first American gold rush two centuries ago. In honour of that initiality, the state Senate has voted to make gold North Carolina's official mineral.

"North Carolina became the nation's first gold producing state and was the only gold producing state from 1803 until 1828. North Carolina was the leading producer of gold until 1848 when gold was discovered in California," said [state Senator Harry] Brown.

That same state was the host of the first authenticated discovery of gold in the U.S., in 1799. The House has yet to vote on the bill.

Key To Next Leg Of Gold Bull In The East

Christopher Barker, of the Motley Fool, says that continued Asian (particularly mainland Chinese) demand is the key for gold going up to $2,000. Demand from that country and India alone make up 57% of total demand, according to the World Gold Council. Both peoples have a traditional attachment to gold, as well as rising incomes and inflation problems. These three factors in tandem have fueled an explosive growth in gold ownership, particularly in mainland China.

Gold's immutable legacy as an enduring store of value is firmly rooted in both cultural traditions: East and West. However, whereas the Western world shifted to an unmistakably negative prevailing attitude toward gold during the 20th century -- devolving ultimately into widespread prejudice against advocates of investment exposure to gold -- China is described by the WGC as sharing a "similar gold culture and heritage" with India. Thus, it may come as no surprise that we are witnessing a much faster cultural reprioritization of gold as a broadly popular investment asset in China than we have observed in the West to date. Indeed, for all the widespread bull-market hoopla surrounding gold, total consumer demand for gold (jewelry and investment demand combined) in the United States actually fell by 3% over the trailing 12 months through March 31, 2011; while in China that demand grew by 37% over the prior-year period.

Because of that rising demand in the East, Barker forecasts gold will reach $2,000.

Flight Into Gold A Flight To Quality

That's the take of Bob Chapman at the Centre of Research into Globalization. He says that the Fed's near-zero interest rate policy and quantitiative easing will eventually produce 14% inflation. [I believe he's using John Williams' gauge; by William's measure, inflation is already above 10%] He also predicts another round of quantitiative easing, in order to cushion the economy from more damage due to still-slumping housing prices and to give the stock market another boost.

We believe that for the past 2-1/2 years the price of gold has been mainly driven by a flight to quality, as gold vied with the dollar for supremacy, as the world’s reserve currency. As we have witnessed gold has won that battle. The only way the dollar or any other world reserve currency can compete is by being backed 25% by gold. The elitist’s royalty of Wall Street and the City of London are quite upset with these developments, because they want all currencies to be fiat, so that they would not have to have a gold backed international monetary unit. Over the last six months another historic factor has come into play in evaluating gold versus currencies, and that is the interconnectivity of gold’s relationship with inflation. In the late 1970s this was the underlying factor for the rise in the prices of both gold and silver. At that time they never had the luxury of strength also coming from recognition of being monetary units. We hear the manic claims that gold and silver are bubbles or are manias. That cannot be because gold is and always has been the only real money. Every time the major media makes these bogus claims they always fail to mention that both gold and silver have appreciated in value in excess of 20% annually versus nine major currencies. They refuse to point out gold and silvers’ 11 years track record having risen from $260.00 and $3.80 respectively to more than $1,500 and $50 per ounce. This shows you the massive deception by the major media, which is totally controlled by the elitists from behind the scenes....

As for Williams' Shadowstats service: whether one likes it or dislikes it, it has the virtue of consistency over time. It demonstrates that calculating inflation the same way as was done in the 1970s, shows inflation this past decade to be just as bad as during the 1970s.

Dennis Gartman Says Gold Prefered Coin of Eurorealm During Debt Crisis

Although he says that the U.S. dollar and Swiss franc will benefit, Dennis Gartman says that gold is the currency of choice now that the Eurocrisis is flaring up again.

Gold is the preferred "coin of the realm" during Europe's sovereign-debt crisis as investors seek to protect themselves from a weakening euro, said Dennis Gartman, an economist and the editor of the Gartman Letter....

"Dollars are a reasonable alternative, and increasingly the Swiss franc is one also," Gartman wrote in his Suffolk, Virginia-based report today. "But the 'trump card' currency of choice is gold and in all likelihood it shall become even more readily embraced, not less so, in the days and weeks ahead as Europe's problems worsen.

Goldman, Sachs also reversed their bearish call on commodities and recommended buying gold.


The metal has gone up more slowly in Euros than in greenbacks, but it did hit a record in Euro and pound terms yesterday.

Indian Physical Gold Demand Weak For Third Day In A Row

According to a Reuters report webbed by the Economic Times, Indian demand was again weak because buyers are waiting for a decline that hasn't come.

"For the past few days demand is very weak. Jewellers are not interested in buying at current level," said a Mumbai-based dealer with a state-run bank dealing in bullion.

"We can see improvement in demand if prices fall to $1,480 per ounce or if prices rise above $1,540. Sharp rise in prices will prompt panic-buying."

The rupee kept falling, which added to the disinclination to buy (outside of any buying panic.)