Once the New York NYMEX opened, gold was hit hard. For about three hours, driven by qualms over People's Bank of China tightening, gold was dropping. After a brief pause, the $1,120 resistance level was sliced through right at 10 AM ET. $1,110 was dropped through with nary a pause. All of this drop has come when the U.S. dollar has climbed upwards. [As Zero Hedge notes, Greece's latest round of troubles is accentuating the rise.] As of the time of this post, the decline halted at the $1,105 level.
Frustrated goldbugs may blame manipulation, but there's a catch-up aspect to it. Before 8 AM, gold was actually up after the gains in the U.S. dollar were factored out. Now, according to the Kitco Gold Index, it isn't. Given that Chinese inflation is likely to moderate after active steps have been taken to make it so, gold really should be down ex-greenback.
Update: As it turned out, gold spent the afternoon drifting just above the $1,110 level. At the end of regular trading, it was $1,111.30. The U.S. dollar spent the rest of the day in a trading range too, above 78.3.
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is this the end of the bubble and the end of the blog?
ReplyDeleteGold hasn't been in an outright bubble yet. At the time I started, I assumed that a bubble was forming and would last for a few years. So far, gold's still at the incipient-bubble stage. There hasn't been a sustained, long-term rise "for no good reason" yet, and broad public participation is just beginning. Moreover, the canaries in the mine - gold exploration stocks - haven't gone manic as of yet.
ReplyDeleteGranted that I jumped the gun a little when I named the blog, but the long-term gold bull market is still intact.
Only a bear market in gold would make me shut down, with the explanation that I was wrong about an all-out bubble forming.