PM Daily Market Commentary – 8/05/2013
Gold finished the day down $9.70 on light volume to 1303.10, silver off $0.17 to 19.67, moving the gold/silver ratio to 66.26.
Since reaching its high of 1350 gold has been in a relatively steady mild downtrend – losing $50 over the past 3 weeks. Every positive news report that might bring the market to conclude "tapering is on the way" (such as yesterday's non manufacturing ISM report) drives the metal lower, while the negative reports cause rallies, but at ever-lower peaks. Lower highs and lower lows are a sure sign of a downtrend, and I'm afraid that's what we're seeing now. Monday there was no big drama, just – a lack of buying interest in the futures markets leading to steadily lower prices.
Since we did not close above 1317, the bounce from Friday was not confirmed, and so the hoped-for buy signal for gold was not triggered. In asia trading, gold has broken below 1300 again and is now trading around $1288, moving closer to friday's low of 1282.10. There is no massive shorting attack going on – more like a moderate one, causing a steady waterfall move down helped along by a more or less complete lack of interest on the buy side.
The dollar is not causing problems for gold – after that massive one-day move July 31, the dollar has moved back down again, almost erasing the gains from the big rally. However the weaker dollar has not helped.
The disconnect between the lack of bids in the futures market, and all the goldbug talk (KWN, harvey organ, etc) about bank runs at the LBMA, gold fleeing from west to east, shortages of physical gold across the system and so on, couldn't be more stark. Perhaps since this is August, all the buy-side traders have gone on vacation…