Battle for Gold Floor Continues On

There are a lot of theories floating around out there making a case for or against the price movement of gold. Recently I made the case for the robust demand for physical gold in the form of jewelry and coins, as well as by central banks - especially central banks in China and other Asian countries - providing price support for the precious metal.

While that is real and is part of the equation, other elements are in play which could pressure the price of gold down even further. In other words, we may not have found a floor yet, even with the robust demand for physical gold.

continue reading on the downside risk for gold

 

Anglo American (LON:AAL), Kinross Gold (NYSE:KGC) and AngloGold Ashanti (NYSE:AU) All Drop As Gold Prices Fall

Gold miners have been taking a hit today, especially right before noon, when traders tend to make their moves, and gold prices along with it. Anglo American (LON:AAL) (AAUKF:PK), Kinross Gold Corp (TSE:K) (NYSE:KGC) and AngloGold Ashanti (NYSE:AU) all dropped in unison with gold prices during that time.

Anglo American was down to 2,358.00 in London, shedding $115.50, or 4.67 percent, as of 11:35 AM EDT. In New York there were no trades, and it stands at $38.90 in the pink sheets.

AngloGold Ashanti fell to $42.61, a loss of $0.53, or 1.23 percent, as of
12:44 PM EDT.

Kinross Gold (NYSE:KGC) lost $0.51 to drop to $15.16, a loss of 3.25 percent at 12:46 PM EDT.

After a quick start today, spot gold prices started to fall a little before 11:00 AM, an are now at $1,193.50, a loss of $10.50.

Gold Levels After Bank Stress Test Results Released

Gold futures and spot gold prices have held their own so far after the release of the stress test results of 91 banks, while the U.S. dollar rose against the euro immediately afterwards.

Results found that of the 91 banks being tested, seven totally failed the test, and were found they couldn't survive losses incurred from sovereign-bond holdings.

Gold dropped right after the results came in, but had rebounded slightly, and are holding level for now.

The U.S. dollar gained 0.8 percent against the euro.

Over the short term, how traders interpret the data of the banks will determine the volatility of gold prices.

Barrick (NYSE:ABX), Goldcorp (NYSE:GG), Newmont (NYSE:NEM) Crushed as Gold Demand Wanes

Gold companies continue to slide on the weakening demand for gold, and Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG) and Newmont Mining (NYSE:NEM) were all down in New York today as gold prices continue to drop.

Spot gold was at $1,184.10 at 4:00 PM EDT, rebounding some after plunging earlier in the day, down about $8.90 at that time.

Other than the usual downturn in gold during the summer months, some of the reasons for the gold miners to fall, along with gold prices, is that inflation seems to be very low, and investors aren't taking into account the sovereign debt crisis in Europe, even though it's as bad as ever, contrary to mainstream media accounts.

Today Moody's (NYSE:MCO) downgraded Ireland government bonds, a sober reminder of the crisis still going on in Europe, and which is far from being under control.

Gold Declines on Euro, Inflation Speculation

Gold futures plunged to their lowest level in two weeks as traders speculate the gold and the euro have decoupled, and inflation may be under control for now, as economic weakness continues to hinder growth.

The euro will finish higher for the third week in a row as the illusion the debt crisis in Europe isn't a concern, mostly on the ability of Greece to sells bonds in the private market.

As long at that is thought to be taken care of concerning the overall European Union sovereign debt crisis, we will probably see downward pressure on gold prices, at least in how it responds in relationship to the euro.

Under normal economic conditions, gold will move in unison with the euro as an alternative investment and place of safety against the US. dollar, but that changed in light of the sovereign debt crisis, and now that the perception it is no longer as threatening as it had been, gold appears to be unwinding against the euro. That could of course change if and when things in Europe get worse, but until then, this should be the way things go.

Now we'll see how gold responds to the US dollar and its movement, as well as the possibility there will be very low inflation for some time to come.

At 1:45 PM EDT, gold was down $18.30, to $1,190.10 an ounce.

Gold Prices Fall Today on Stronger US Dollar Slowing Demand

A stronger US dollar has some investors looking to the greenback as an alternative place of safety rather than gold, and gold prices today have fallen by $11.60, to $1,199.80 an ounce, as of 12:20 PM EDT.

The US dollar has risen today against a basket of six major currencies.

Gold is holding better against foreign currencies today than it is against the US dollar, so some have recommended selling the euro, for example, and invest in gold. That has been a practice for some time now as the sovereign debt crisis in Europe became known.

So at this time the dollar is holding gold prices down today, as fear has shrunk and investors look to other places to put their assets.

Gold Approaching Buying Opportunity Levels

Now that gold has taken a hit and seemed to have leveled off, it looks like it'll be close to another buying opportunity, as we had to wait to see how far it would correct before rebounding.

With none of the underlying fundamentals changing in any way, it's only a matter of time before gold surges again.

Even though summer is the typical slow season for gold, I don't think that pattern is going to continue to hold, as the situation we're in is one that comes along very few times over the period of a lifetime, and we're in one now.

Some are even acting like the euro is going to continue to strengthen because the EU central bank head made the irresponsible and dishonest comment that the Euro Zone was in an economic recovery. I guess it's a miracle! It would have to be if you were to believe that nonsense.

The sovereign debt crisis hasn't been solved in Europe, and the European economy isn't recovering because Trichet says it is.

Although no one can be certain, it does seem gold has taken this hit well again, and should be poised for another push upward.

That doesn't mean it won't fall further, just that seems to have found support just under $1,200 an ounce, and from there it won't take much to make it surge forward, which should start happening soon.

Euro Rally Pressures Gold Prices Again

Gold futures look like they'll fall for the third week in a row, as a rally in the euro has resulted in traders moving their money out of the yellow metal.

There has been a furious effort by officials in the European Union to prop up the euro, and it is working at this time, even though there is little to justify the optimism some are putting in the failing currency.

Just like his American counterpart, European Central Bank President Jean-Claude Trichet has announced the so-called economic recovery is gaining momentum, and this fantasy has been latched onto by the clueless who humorously believed his assertion.

Or at least, they knew others would believe it and put there money temporarily in the euro to take advantage of the temporary favor it is enjoying.

Some strategists and analysts have drooled over the assertion there is an economic recovery in Europe, and have announced the fear that had driven people to gold has been removed from the equation.

To believe the sovereign debt crisis in Europe is over, the American economy is recovering, and China isn't dealing with urban property challenges, is faith, not something based in reality.

Everything that drove investors to gold is still out there, and once that is again taken into consideration, gold prices will rise again.

Gold Prices Close Down Below $1,200 an Ounce

In somewhat of a past pattern, gold prices today have been moving downward, mostly on what is perceived as slowing demand in India.

Recent lower gold prices has began to create demand in physical ownership in gold rather than investing in the yellow metal.

Typically this part of the summer is considered a slow time for gold prices, and they usually will rebound later in the year.

I don't really think this is how it will play out this year, as they are too many variables, especially the terrible shape of the economies in the U.S. and Europe to think gold won't continue to be a safe haven factor throughout the summer months.

Nothing has changed there, and once this irrational optimism passes in equities, we'll see the underlying fundamentals return to the minds of investors, and gold resume its upward price movement.

This isn't to say there won't be temporary corrections, as we're experiencing now. But as soon as the latest negative economic news returns, investors will pour money back in gold again, and the prices will consequently rise with that.

Barrick (NYSE:ABX), Newmont(NYSE:NEM), Goldcorp (NYSE:GG) All Down as Investors Move to Equities

Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM) and Goldcorp (NYSE:GG) are all down in today's trading session as investors move their money into equities, hoping for what some believe will be a rally after stocks got pummeled last week.

The three giant gold miners are participating in the drop in gold prices, with investors ignoring risk and safety today in hopes of making some quick gains.

Nothing has changed to warrant this other than the stock market plunging on weak economic news, so we can expect this to reverse itself once the idea making a quick buck on what is hoped to be a temporary rebound plays itself out.

It'll be interesting to see how long it continues before stocks get hit again and gold resumes its upward journey.

Gold Falls as Euro, Equities Strengthen

Gold futures dropped below the $1,200 an ounce mark early in the trading day, as the euro and equities strengthened.

Investors aren't as concerned about risk aversion today, the reason for the downward pressure on gold prices. Prices fell as low as $1,191.90 an ounce early in the trading session, as American returned from their long holiday weekend.

The euro was the primary factor so far in the day, as recently gold has traded inversely to the euro because of the sovereign debt crisis in the European Union.

This should be a temporary sell-off, being the third day in a row gold has fallen, as the market digests the implications of the sovereign debt crisis in Europe, the weak US economy and the Chinese urban property inflation challenges.