Is Gold Getting It Right Or Are We Headed For Another Temporary Bottom

The Commerce Department said that U.S. construction spending rose 0.6 percent in September to the highest level since March 2008, pushed up by a surge in apartment building.

Spending on construction rose to a seasonally adjusted annual rate of $1.09 trillion. Growth was up in almost every sub-sector, ranging from the multi-unit dwellings to single-family homes, from schools, and roads to water supply infrastructure. Religious buildings joined in the party, rising at a robust 4.8%.

Gold sank today on that specific news and on a general feeling that the economy will be strong enough for the Fed to raise interest rates at its December 15-16 meeting.

The yellow precious metal is off $7.00 at 3 PM in New York. The other precious metals performed even more weakly than gold, palladium off by 3.5%.

Yet U.S. equities seem to be reacting oppositely from precious metals, all three major NY indexes up from nearly a point to nearly 1.5%.

The S&P 500 is up over 1.00%.

This may have been in reaction to a decline in China’s PMI gauge, which disappointed, adding more fuel to the fires of concern burning over the future of China’s economy.

As might be expected, Asian stock were down on the news that the manufacturing sector in China was still shrinking in September, although at a slower pace.

The U.S. also experienced a fourth straight month of manufacturing decline.

The manufacturing declines again stoked negative trading for crude oil and other energy prices.

Brent North Sea is off 1.5% while West Texas Intermediate fell 1.00%. The declines in crude were little affected by currency fluctuations even though the U.S. dollar was slightly weaker.

OPEC and Russia are also both pumping at record rates, an indication of how natural resource dependent certain countries are and how they have failed to invest beyond energy.

An indication of the value of a diversified, innovative economy was evident today as the NADAQ led all other measures with biotech and health care leading, while Apple and other consumer tech issues giving a mighty assist.

Wishing you as always, good trading,