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Gold: Vulnerable, but Looking for a Bounce

No one should be surprised if gold prices take another dive. The market certainly remains vulnerable to more institutional selling. That said, I'm looking for a bounce-back in the week ahead -- with the yellow metal recovering some of the ground lost in the recent flash crash -- if only because the price has fallen so far, so fast. Some of the institutional players who were inclined to lighten their long positions or short the metal along the way down have already done so . . . and some of the large hedge funds -- including a few that made news by selling in recent months -- may begin ...

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GOLD — What’s Going On?

Gold prices have caved today under pressure from dollar appreciation and wave of technical selling at key chart points - selling aggravated by continued flow of funds from gold (and commodity indexes) to equities. Just as the rising price trend in the equity indexes has attracting more buying, the renewed downward momentum in gold is engendering short sales and more outflows from gold ETFs. Importantly, program trading and other technical strategies have added to the downward pressure on gold - and continue to do so.  (See my previous commentary posted earlier today for more on program ...

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Dark Pools, Program Trading and the Decline of Gold

Day after day, gold trading has been, and continues to be, dominated by institutional trading in the "dark pools" where over-the-counter dealer and interbank activity goes largely unseen. Don't under-estimate the influence of trading in the dark pools where "invisible" institutional trading can - in a flash - knock gold to the mat, leaving most gold-market participants and observers wondering what happened. Indeed, much of this activity in the interbank and dealer market goes unreported - but buy-sell transactions, high-frequency, and other program trading in these dark pools, often at ...

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GOLD: Where’s the Mojo?

Just when many gold-market participants and observers thought it safe to wade back into the long side of the market, the metal has taken another dive. Having begun 2013 near $1,650, gold prices are now off about 15 percent for the year to date and some 25 percent from its all-time high just over $1,920 in September 2011. A number of writers have already declared the end of gold's decade-long bull-market run. And, even some of the most outspoken gold bulls are worried that the yellow metal has lost its mojo. Having failed to build upon the nascent upward momentum and unable to move back ...

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GOLD — Confounded by the Machines and Dark Pools

Gold continues to confound, dropping another $25 an ounce this morning as technical and computer-driven program trading triggers selling on U.S. derivative markets, all despite favorable fundamentals and what should be seen as favorable economic and geopolitical developments. Gold Lower Despite Bullish News This morning's dispatches from India and China, the two biggest gold-consuming nations, report that demand in these markets continues unabated . . . and coin dealers report still-strong retail demand for bullion coins and small bars in the Western markets. News from the Middle East -- ...

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Monetary Policies Favorable for Gold-Price Recovery

Global financial markets will be taking their cues from U.S. Federal Reserve and European central bank policy meetings to be held by the Fed on Tuesday and Wednesday and by the European Central Bank (the ECB) on Thursday. The consensus among economists who pay attention to these things suggests there won't be any significant change in Fed policy . . . but, in contrast, there is a strong belief that the ECB will cut European interest rates from their already record low levels. ECB Expectations The ECB has seen a disappointing string of European economic data over the past several weeks. ...

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QUICK MARKET COMMENTARY

Despite further gold ETF liquidation in recent days and some short spec selling on futures exchanges, gold prices are moving higher on unrelenting physical demand for small bars, coins, and jewelry from the gold-friendly Asian markets as well as retail investment demand in US and European, especially for gold (and silver) bullion coins. It is particularly encouraging to see gold move higher despite the stronger dollar (against the euro and yen, for example) . . . and at a time when equities are moving lower (or at least are not moving higher). In the past year and a half, the continuing ...

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GOLD-MARKET INSANITY

Gold prices were driven insanely lower today -- not by market fundamentals or the latest readings on the U.S. and global economy -- but by technical and computer-driven program trading mainly in futures, forward, and options markets. If anything, this morning's U.S. economic indicators for retail sales, consumer sentiment, and well-behaved producer prices should have had a positive effect on gold prices. News of a weaker-than-expected economy -- particularly with inflation indicators subdued -- should shift expectations of future Federal Reserve monetary policy toward more, not less, ...

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GOLD BEARS BEWARE

Gold bears have been a gleeful group of late, pointing to the recent decline in gold exchange-traded fund holdings as evidence of investor disinterest in the yellow metal.  Gold bears also see the market's rather lackluster performance over the past year and a half - and the failure of prices to move higher - as further evidence the decade-long bull market has run its course. Yes, gold has retreated some 20 percent from its September 2011 all-time high (near $1,924 an ounce) to its subsequent low (just over $1,520). Yes, Gold ETFs have seen some substantial and high-profile withdrawals in ...

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GOLD: Talking Points

In my view, there is a very high probability gold will surpass $2000 an ounce by year-end 2013 - and it could go much higher.  Moreover, by mid-decade, the metal's price could double or even triple from recent levels. Looking backward, gold is off some $250-$260 from its September 2011 all-time high of $1924 an ounce.  This is a decline of roughly 13 percent - in line with past bull-market corrections. In the weeks ahead, much depends on institutional speculators at the big banks and hedge funds.  In the past year or so, these large-scale players have made good money trading futures, ...

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