Gold actually had to fight through gains by the euro to lose ground, but the temptation to lock in profits on the first really big gold run in a year was too hard to overcome.
In early trading gold was down $3.34 to $1,695.36 and silver was off $0.31 to $32.28, for a silver/gold ratio of 52.5.
Commodities were split with platinum and palladium joining silver and gold lower while copper and crude oil sailed higher.
The European Central Bank announcement of unlimited bond buying is what got us here but it will be the Federal Reserve that dictates whether we stay in the $1,700 neighborhood or push higher.
Until we get the Fed announcement that leaves us back in the indecisive zone for gold prices, which is below the sell target and kind of high to be buying into a late rally. Still, it’s been a decent shortened trading week for gold. Unless we get some serious selling later in the day we should close higher on the week.
The rest of the economic news is looking brighter. The equity markets are hitting new highs and corporate profits remain healthy. Unfortunately that hasn’t translated into hiring on the jobs front with unemployment numbers staying stubbornly high.
If employment stays tepid in the jobs report, then look for the Fed to come out with something other than a token stimulus package. If that announcement comes out today, then we could see a late rally in gold prices. Hopefully the Fed will wait until next week to make the big announcement, but a weak employment report could force its hand.
This is a tough spot for retail investors who are facing high prices today but the potential for even higher prices next week. Right now anything under $1,700 looks like a tempting entry point, but don’t forget there is still softness in the Asian gold market and if prices go too high we could see central banks bleed off some of their gold supply to raise cash.
All in all, it seems like a good time for small buyers of physical gold and silver, people like you and I, to just hang out on the sidelines and watch. Hopefully you accumulated over the summer and now you can observe the current market gyrations with bemused indifference.
Still, we’re going out on a high note for the week and that’s something to feel good about.