Day Of Digestion

Despite an assist from a weaker dollar, gold prices slipped about $5 today, taking the leading precious metal below 1300.

There was wariness around the markets today. All the major U.S. and European indices were down and two of three Asian equities markets were down, the lone exception being Shanghai, which saw some bargain hunting because of continued weakness in the Chinese economy.

Oil was down and the U.S. 10-year bond saw interest rates slide below 2.7%. Meanwhile, US. consumer credit soared to over $3.1 trillion, a sign that those who are working are re-establishing their credit, or extending it, as the case might be.

Everyone is jittery about the earnings season coming up on Wall Street, and this certainly hasn't been helped by the seemingly never-ending parade of recalls by the automakers. Overseas, the worries seem to be focused on the tech sector both in Europe and the Far East. Neither area can afford to fall much farther behind the U.S. in that sector.

It should be noted that U.S. stock are now essentially even for the year, a 3-month-plus period that started out glowingly has since tarnished. The general appraisal is that too many stocks have been bid up on pure speculation and the chickens are coming home to roost.

The problem for precious metals is that the dip in equities is perceived as temporary - a small correction, or the like. So, while gold (and to a much lesser extent, silver) is gaining value - fighting its way back up, investors don't see a lot to "defend" themselves from, so gold isn't getting the real boost it needs from fear and trembling in the marketplace.

Additionally, there was some technical selling today, but, in all, gold weathered the mini-storm well, and that's good news for bulls.

As always, wishing you good trading,