Just A Darned Minute

After yesterday's dramatic price retreat yesterday and a plunge to 1216 in intraday trading today, gold has recovered and is posting a very modest gain today in the late afternoon.

Short covering, bargain hunting and opportunism are at work. Many traders sensed gold had fallen too far, too fast. But the fundamentals are in place for further declines once we get past this small rise.

All major equities indices were up today across the globe, except for the Hang Seng, which was significantly lower on a drastic slow down in housing pricing in China.

Oil and gold uncoupled for the day, which gives us reason to believe that investors and traders aren't seeing much upside to crude or Brent. Natural gas fell by 2.5% as well. Anyone who was alive in the 1970s will remember when we were told that at most there was a 30-year supply of energy. Well, here we are 40 years on from the energy crisis of the Carter years and we now have a glut. Go figure.

To be fair, the U.S. economic data released today was of a confounding nature. It made some investors ponder the value of gold again, especially at its low price.

Philadelphia's Federal Reserve Bank said its business activity index fell to 22.5 in September, down from August's reading of 28.0, which had been the best reading for the index since March 2011.

But, initial claims for 50-state unemployment benefits dropped 36,000 to a seasonally adjusted 280,000 for the week ended September 13, the lowest level since July, according to the Labor Department. Consensus was looking for 315,000.

A Commerce Department report showed new-home starts dropped 14.4% to a seasonally adjusted annual 956,000-unit pace in August, against projections of a 1.04-million unit rate.

We are going to be digesting the FOMC policy statements yesterday for some time.

And then there is the separation vote in Scotland.

Said Scots national poet Robert Burns:
"The best laid schemes o' mice an' men gang aft agley."  ("Agley" means "awry" in standard English.)

As always, wishing you good trading,