After The Weekend...

The stock market's getting excited about the bail-out of Dubai World, but gold's barely budged. There was a bump-up last night from Friday's closing price of US$1,115.10, all the way up to about $1,125, but that brief rally has mostly faded. As I write this post, gold's meandering at $1,118.80.

Nevertheless, given that gold's slid more than $100/oz, one write-up's optimistic. This Marketwatch report credits the bail-out for gold's uptick, although it quotes an expert as saying that the rise is due mainly to technical buying. As I write this post, the more obvious beneficiary has been futures on the thee major U.S. stock market averages. A Wall Street Journal report is more laconic: "Spot Gold Bounces on Dubai Debt Deal, Weaker Dollar." The expert quoted in the WSJ write-up is more in tune with gold's recent movement:

Monday's upbeat tone wasn't enough to change the bearish near-term outlook for gold, analysts said. Positive U.S. economic data this week could bring support to the dollar, while profit-taking ahead of the year-end should also keep gold under pressure, they said.

"I think we'll have another look to the downside," said [Mitsubishi gold analyst Tom] Kendall. "I think the first real key area for gold is $1,085 per ounce."

When the impending Dubai World default hit the news, gold plummeted but largely recovered. At the time, that bounce was taken as evidence of the strength of the gold rally. Now, the lack of reaction to the bailout news is taken as confirmation of a near-term bear movement. In the more abstract sense, nothing's changed: both are taken as confirmation of the near-term trend.

And yet, the Dubai World debacle was revealing; it showed that the greenback is still the king of the safe-haven mountain. For now, anyways.