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Gold Slumps as Wall Street Soars

With the Dow topping 16000 and the S&P500 index reaching 1800 – both psychologically important levels – gold continues to be an innocent victim of the frenzy on Wall Street. Trading around $1245 an ounce the metal’s price is off some 25 percent from the start of 2013 and is 35 percent below its September 2011 all-time high. Reflecting the super-stimulative monetary policies currently pursued by the U.S. Federal Reserve, the Bank of Japan, and the European Central Bank, U.S. and world equity markets are achieving new all-time highs as more and more investors jump on the stock-market ...

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Suffering Gold

Gold continues to suffer under a cloud of bearish expectations.  Its price has been trending lower for some 20 months now - and, at recent lows, it is off some 30 percent from the September 2011 all-time high of $1924. A growing number of investors, analysts, and journalists are already writing obituaries for the decade-long bull market and foresee only a grim future for the yellow metal.  These naysayers, most prominently economist Nouriel Roubini who gained some renown for predicting the financial-market debacle of 2008, point to a number factors to support their bearish ...

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Captive Gold: A Quick Note on the Current Market

For now, gold remains captive to the flow of U.S. and global economic indicators and prospects . . . especially those that may influence Federal Reserve monetary policy. With the U.S. economy far from a satisfactory and self-sustaining recovery, the news is likely to become increasingly positive for gold -- with diminishing expectations of imminent "tapering" (that is scaling back the Fed's monthly bond-buying program) eventually replaced with talk of additional monetary stimulus of one sort or another. Home in the Range At the moment, however, gold appears range-bound between $1370 and ...

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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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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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Macro-Economics and the Future Price of Gold

The future price of gold will likely reflect a wide variety of prospective developments.  That's what makes gold so interesting . . . and so difficult to predict. The intensity of private-sector demand in China, India, and elsewhere in Asia is high on my list of gold-price influencers. Similarly, the magnitude of net central-bank reserve acquisitions will almost certainly play an important role. So too could the unfolding economic and political situation in Europe. Alternatively, gold prices may wind up hinging most of all on some black swan or unpredictable event in the ...

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