Gold

Equilibrium

The keys to the current bearish pressure seen in the precious metals markets as well as the commodity complex are twofold. First we have a major rally globally in the equities markets, which has caused many traders and investors to reallocate funds that were formally in the precious metals and commodity complex, moving them into the equities markets.

Allegedly, physical demand in China has sparked the mini-mini-rally we are experiencing in gold, although that is tough to swallow given that prices have been low for some time. It might be that buyers in China are going on a bit of end-of-year spree.

Trading is, as you might suspect, very quiet today. Gold did show some modest strength on short-covering today, although as with all quiet trading days, any movements should be taken with a large grain of salt. The fewer contracts that move, the more exaggerated the price movement, regardless of the direction.