Precious Metals

Gold had a very static day, falling below $750 at the London open, then trading rangebound between there and $740 right through the Globex, and finishing at $746.60, down $5.40. Overnight, gold has pushed higher.

Platinum dropped in the overseas markets then also traded tightly, between $1100 and $1150 through the session, ending near the middle at $1131/oz., down $30. Overnight, platinum is trending higher.

Silver was up in the first hour of New York trading, but dropped in the second and wound up little changed on the day, closing with its best performance in a while at $10.56/oz., down only 6 cents. Overnight, silver is sharply higher.

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New day, same tune, as the precious metals markets are unable to get any traction against a strong dollar and a crude price that slides ever closer to the century mark. Yesterday, even as gold fell for the ninth straight session, the good news was that things could easily have been far worse.

Unquestionably, traders’ fear of a slowing economy or outright recession, coupled with a (probably mistaken) belief that inflation will be severely curbed, has sent buyers of gold scampering for greener pastures. And weakness in the rest of the commodities markets has only added additional juice to the bearish sentiment.

The selloff has been so extreme that Peter Grandich, editor of the Grandich Letter, lamented: “I have just recorded the single most oversold condition for gold since the great bull market began. Mining shares are also deeply oversold and juniors, well, the fire sale has become a nuclear detonation. Many juniors shares have fallen to levels where it will be tough to continue without recapitalization as financing will be hard to come by for the foreseeable future. However, some companies have significant cash and their share prices can double or triple from these extremely low levels in rather short order.”

Once again, there was fresh evidence of burgeoning physical demand for gold even as futures longs are pitching their contracts overboard. Reuters reported yesterday that dealers are bemoaning “a shortage of gold bars in Singapore and Hong Kong as jewellers stepped up purchases ahead of religious festivals in India, the Middle East and Southeast Asia.”

And, “Gold prices might already be trading at oversold levels,” wrote Tobias Merath, of Credit Suisse. “Fundamentals still speak in favor of a recovery to $900 or slightly higher in the next few months.”