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Today’s AM fix was USD 1,724.50,
EUR 1,327.56, and GBP 1,076.47 per ounce.
Yesterday’s AM fix was USD 1,741.00, EUR 1,347.00, and GBP 1,087.38 per
ounce.
Silver is
trading at $33.93/oz, €26.21/oz and £21.26/oz. Platinum is trading at $1,626.50/oz, palladium at $680.25/oz and
rhodium at $1,050/oz.
Gold fell
$22.10 or 1.27% in New York yesterday and closed at $1,719.20/oz. Silver
slipped to a low of $32.92/oz and rallied back, but
finished with a loss of 0.91% at $33.69/oz.
 
Cross Currency Table – (Bloomberg)
Gold recovered somewhat overnight in Asia
and again today in Europe despite the sharp selling seen on the COMEX
yesterday.
As ever, it is very difficult to pinpoint
exactly why gold and all precious metals fell in price. Interestingly, oil
fell by even more - NYMEX crude was down by 1% and was down by more than 1.7%
at one stage.
The CME Group, which operates the U.S.
COMEX gold futures market, said Wednesday's plunge in gold was not the
consequence of a "fat finger" or a human error. The trading
wasn’t even fast enough to trigger a pause on Globex,
said CME.
One thing that we can say for certain was
that there was massive, concentrated selling as the New York stock markets
opened with some 35,000 lots sold which is equivalent to 3.5 million ounces
and saw the price fall from $1,735/oz to $1,711/oz between 0825 and 0830 EST.
One sell order alone was believed to be
24 tonnes or 770,000 troy ounces. Incredibly there
was 35% daily volume in just 60 seconds.
The selling, like all peculiar, counter
intuitive, sharp sell offs in recent months, was COMEX driven with COMEX
contracts slammed leading to further stop loss selling.
The selling may have been by speculative
players on the COMEX. It may have been algo or
computer trading driven or tech selling – although this is less likely.
It would be naive to completely discount
the possibility that a bullion bank, short the gold and silver markets, may
have been trying to protect their large concentrated short positions. The
CFTC data shows some bullion banks continue to have massive concentrated
short positions - which are still being investigated.
Informed commentators questioned the
nature of the selling as a large institutional COMEX trading entity would
normally gradually sell a position of this size in order to maximise profit.
Gold Spot $/oz, 3 days 3 minutes –
(Bloomberg)
Other speculation was that because of the
wholesale liquidation of all precious metals and some other commodities, the
selling may have come from a fund forced to sell a range of speculative
positions after the SAC Wells notice.
Futures and options expiration may have
also played a role, according to some analysts.
The robustness of gold overnight and
recovery this morning is encouraging as normally one would expect to see
follow through selling after such a sharp move lower.
The gold mining stocks indices were also
higher yesterday which suggests that some precious metal market participants
see the move as another mere blip in the precious metal bull markets.
The fundamentals driving the gold market
remain very sound with broad based demand - store of wealth, investor,
institutional and central bank - continuing to be seen globally.
There have not been very significant
increases in open interest on the COMEX and there is no mania on trading
floors and universal bullishness.
Indeed, this is far from the case today.
There continues to be little or no positive coverage of the precious metals
in the non specialist financial media.
While ETF holdings are at record highs -
the increase in holdings has been tentative and gradual with no huge jump in
demand which would be associated by a market top.
The shoeshine girls and boys have been
selling large amounts of gold jewellery in the
international phenomenon that is 'cash for gold.'
Meanwhile figures for mints, refiners and
bullion dealers in last quarter show retail investor interest is tepid at
best.
Gold Spot $/oz, Daily – (Bloomberg)
Physical buyers should use the paper
playing shenanigans of as yet unidentified players to continue to accumulate
on price dips.
Today US GDP for Q3 is released at 1330
GMT.
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