After gold's midnight massacre it seems that the selloff is acting like a cancer across the commodity complex. The market is fearing that the person or government that sold massive quantities of gold in the middle of the night may know something the rest of us does not.
Russia’s central bank bought about 150 metric tons of the metal this year, announced Governor Elvira Nabiullina yesterday. The pronouncement immediately created buying in the market, prompting gold to rise to a two week high at $1,200 an ounce.
"It seems that a number of safe haven refuges like gold, the Japanese yen, U.S. Treasury bonds, and the Swiss franc have all been under pressure lately," says Ed Meir, metals analyst at brokerage INTL FCStone.
Spot market gold prices traded just above $1,660 an ounce during Tuesday morning's London session, a few dollars down on last week's close, while stocks and commodities were also broadly flat on the day and US Treasuries gained.
The wholesale market gold price fell further Thursday in London, falling hard to eight-session lows at $1,587 per ounce following last night's "no change" decision from the Federal Reserve on new US quantitative easing.
In volatile up and down trade, gold dropped for its 3rd day after Bernanke and the Fed failed to announce the latest round of QE. The sharp fall in gold and then even sharper rise and then fall again was unusual trading.
Gold fell in Asia prior to gains late in the session and these gains continued in early European trading as lower prices are leading to some safe haven demand. Gold looks set to see a fourth consecutive monthly loss which will be bearish technically.