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Morning Gold Fix: June 4, 2010
Courtesy of www.fmxconnect.com
Gold was weaker yesterday, as markets favored equities over safe havens (with BP as a notable exception).
The market opened down around $5.00 yesterday and traded sideways for most of the morning. Then around 11:00 AM EDT, a quick selloff occurred taking the August contract from a high during that period of 1219.60 to a low of 1202.40. The selling stopped and futures stabilized in the1208 area, but we feel the damage was done. Hot money and speculative longs are losing patience or new shorts are punting in expectations of bearish info this morning. With the employment numbers due out at 8:30, Nervous Nellies will square books everywhere. We might add that this is about the time that the stock market began in its own sell-off. Gold and equities are moving in lockstep approaching the NFP.
The NFP number is expected in the +600k range from Goldman Sachs along with a downtick in the unemployment number to 9.7%. European and Asian markets were relatively calm; they are also waitinging for more signs that the great buyer of stuff, the U.S. consumer, will have a job to get more blenders, Ipods and other modern conveniences.
Last night Gold’s weakness continued as it took out the lows established during U.S. hours yesterday. It touched a low of 1198.50 on Globex. The likelihood of further IMF sales are also overhanging the market as the head of the IMF policy steering committee stated that in light of loan potential to Europe, “the IMF is not properly funded and members were talking of doubling the SDR levels.” Governments tend to buy the highs and sell the lows. If this is true, expect a big sell off as the market punishes the IMF for telegraphing its interests.
August gold was down 3.5 to $1206.5 per 100 troy ounces as of 8:00 AM EDT, this morning. The June U.S. dollar index was up .561 to 87.78. July platinum was down 12.9 to $1530 per 50 troy ounces. July Silver was down 12.1 cents to 17.81.
-Elizabeth Thawne
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One thing about the futures markets in the last couple of weeks has been a totally out of whack sense of reality with the focus on emerging markets and commodities, while treasuries rallied strongly and gold was firm. I keep waiting for the day when the futures markets turn once again to featuring currencies, treasuries and gold, and declining oil and copper, but for now they're mixed. Although, today is the first day in over a week where treasuries popped into the lead.:
http://quotes.ino.com/analysis/extremes/futures
More declines in short term yields should be in the cards, which would also support gold prices.
No mystery that gold should rise on implied negative yields, which could very well become real negative yields.
Classic liquidity trap. No amount of money printing is leading to any growth in the economy. Those days are over for a long time to come.
An interesting article on "The Financial Bubble Experiment" where an econophysicist makes predictions and posts them in encrypted form on arxiv (so as not to spoil the experiment). He predicted the drawdown in Au months ahead of it happening based on his method of analyzing greater-than-exponential performance coupled with increasing frequency of sell-offs and rallies.
http://www.technologyreview.com/blog/arxiv/25269/
Score one for the really, really technical traders.
He "predicted" that "the gold bubble" would pop. Now he is trying to tell us that it did, even as gold is less than $40 off all time highs.
Whoever that guy is, he's a bit desperate for attention to be reporting such failures to the general public.
You have to keep improving the art. You could fool people with a crystal ball, now it takes a big mysterious machine with a propeitary mathematical gobbly gook model to get people to buy.
Here is what Jesse had to say...
"I followed Sornette closely around 2000-2005.
You could have lost quite a bit of money following his ‘predictions’ which he used to provide in real time, and not in secret.
He based his original work on the prediction of earthquakes, which he is also not able to do.
I think it is more a study in scientific hype than sound forecasting."
It turns out the the 'technical analyst', Sonorette, has been correct on 2 of his last 4 calls. Wow, really impressive! Anyone can do as well with a coin toss. In addition, I am very skeptical of his method of making a prediction in encrypted code six months in advance and then opening his prediction after the fact. Smells like dead fish. Sonorette need to read 'The Black Swan'...for starters.
Doesn't seem its in lock step any more. NFP number thrashed 20 pts off the SPX and Gold held above the 1203$ mark. Silver on the hand is getting punished...
Agreed. the correlation is still there, but a battle is going on, as longs with deflationary fears sell, while longer term inflationary believers buy dips. Whippy ranges that are tightening, where they used to be whippy large ranges.
Silver today is having a strange behaviour, it falls on SPX worries but rebounds (on lower valuations during the day) on its correlation with Gold which is holding up nicely at $1207.
Blamo! Gold trumps all. 3PM at 117.00 to 5pm at 119.00; silver is unleashing itself from SPX and trying to correlate to GLD. Last couple of days SLV:GLD has diverged, since Silver has been proven to be more easily manipulated I expect a an upward move (another 4% in one day) in the next couple of days (if Gold holds on to its gains).
Gold was obviously manipulated as it is on any day it is slightly down.
It's the Nadler collusion conpsiracy. I should know. They pay me eight million dollars to post on the internet all day. Just so you all know, I'm a Guatemalan Central Bank agent. Due to conditions in my country, I am trying to keep the gold price down so that the prices of radishes and rutebagas can still remain high and our farmers can eat. Due to monetary market manipulation, we can only grow vegetables that begin with the letter R. It's my job to keep prices for those vegetables high through gold manipulation by posting on the internet.
You folks finally outed me.
Kodiakkid is that you baby?
Nadler we know it's you papa