This Wall Street Journal Online report quotes a trader as saying gold is following the greenback, as the metal lacks direction on its own. A Bloomberg report has a similar quote, and also ties gold's plummet to similar downdrafts in several other commodities. Another quote expresses hopefulness about the metal:
“Gold may be able to avoid being dragged down by other commodities because of its safe-haven status,” said He Ruiyan, head of research at Xiamen International Trade Futures Co. “We’re seeing some flight to safety after China’s tightening.”
The above-mentioned U.S. dollar is down. This morning's dip made for a new 3+ week low in the U.S. Dollar Index. After recovering from a much milder drop to the 77.1 level early this morning, the greenback dropped to 76.596 before recovering slightly.
Two days ago, I wrote that gold had formed a reverse head-and-shoulders pattern. (In the original post, I forgot to specify that it's a reverse formation.) That formation was breached yesterday by the decline to $1,125, as this Stockcharts.com chart shows:
The neckline level - at about $1,140 - was clearly breached yesterday. I point this out to show that chart patterns are not always reliable, and I admit that it had me going for a time.
[Anyone who needs an explanation of the head-and-shoulders pattern will find a brief one here.]