Friday, January 15, 2010

Vacillation Ends, Then Returns

Starting at 9:30 AM ET, like yesterday, gold took a dive as the U.S. Dollar Index climbed to a new daily high. After both vacillated in the wake of the latest U.S. inflation report, the greenback trended up slightly and gold took a spill. The half-hour slide took the price of the metal down to US$1,126.

This same pattern, when gold's been pushed down about the same time the market opens, has occurred so frequently that some of the hardcore goldbugs are claiming manipulation. More likely, if it's goosed at all, a large speculator or group of speculators is/are taking a whack at the price and seeing what happens. The last couple of days, gold has recovered, although not so much this day.

This Wall Street Journal Online report credits the greenback's strength to pressure put on the Euro after a rumor floated around claiming that Angela Merkel is going to resign the German chancellorship. Also noted is a better-than-expected result from the New York Fed's Empire State manufacturing survey. A Marketwatch report, in addition to also attributing gold's fall to strength in the U.S. dollar, says that disinflationary fears with respect to China are (still) pushing gold down.

Update: This time 'round, gold has not fully recovered from its regularly-scheduled beat-down. The U.S. dollar climbed steadily, spiking up to 73.309 at about 11:15 AM ET, and was later in a short-term range whose center is close to 77.25. Gold lumbered back up to above $1,132 - oddly reaching that level at about the same time as the greenback spike-up - but pulled back since. As of the time of this first update, the spot price for the metal was $1,130.60

If I were a gold trader, I'd keep a close eye on the $1,125 level.

Update 2: The rest of the afternoon saw gold drfting in a trading range. The vacillation that accompanied this morning's economic data ended up returning. Although the range was on the low side - roughly bordered by $1,127 on the low end and $1,131 on the high - trading was largely directionless. $1,125 held.

The U.S. dollar index spiked up again, to a new daily high shortly before 3 PM. Gold didn't react all that much in consequence. At the end of the week, the index closed at 77.20 - a fairly mid-range end given the day's trading.

At the end of the week, gold was down more than $20 and closed near the low end of the week's range. However, it did manage to close near the high end of this afternoon's range. Whether by coincidence or design, spot gold ended the week at exactly $1,130.00.

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