Gold, Silver Smacked Down Again

Gold was little changed until mid-morning in New York on Friday, when it got briefly taken down below $865 before settling into a tight $5 range through the rest of the Comex and the Globex, finishing at $868.70/oz., down $5.60. For the week, gold lost 1.2%.

Platinum sold off in European trading, but righted itself in New York to edge back into positive territory, ending at $1205/oz., up $2. For the week, platinum tacked on 1.5%.

Silver was down in Hong Kong, down a little more in London, then had every New York rally attempt thwarted as it went essentially nowhere for the rest of the day, closing at $11.89/oz., down 33 cents. For the week, silver shed 3.6%. (Click here for charts)

Gold and silver were under assault again yesterday, with both taking hits, although platinum continues to defy the bears and hold its own.

The metals might have gotten a lift from equities and oil, both of which finished the day higher, but they didn’t. Traders are clearly looking more toward the rallying dollar and receding inflation fears at the moment.

As James Moore, of TheBullionDesk.com, put it: “Further signs of investor and economic confidence emerged.” Financial earnings “gave rise to speculation the worst of the banking crisis is over and perhaps the global recession is easing.”

Demand for paper gold has also fallen off a bit. The SPDR Gold Trust reported that its holdings fell to 1,119.43 tons (36 million ounces) on Thursday, a drawdown of better than 265,000 ounces. It was the biggest drop since April 3.

The correction may have further to run, as a lot of optimism has suddenly appeared after a few small signs that the US economy is not quite as bad off as it might have been, a rather shaky basis for any good cheer.

“Further strength in equity markets would signal an increasing risk appetite, which would be detrimental to precious metals, which have relied on safe-haven demand,” wrote Toby Hassall, an analyst at Commodity Warrants Australia.

“Over the longer term however,” Hassall hastened to add, “unprecedented fiscal and monetary stimuli have increased inflationary expectations, which will be constructive to gold prices.”

Source: Gold, Silver Smacked Down Again