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Gold Falls to Six-Week Lowsby Peter A. Grant
Oct 19, AM 
Gold remains defensive going into the weekend. The yellow metal fell to a new six-week low after a catalyst to drive the market above important chart resistance at 1800.00/1802.89 failed to materialize.Better than expected US and Chinese economic data this week, temper expectations of further central bank accommodations. Uncertainty also continues to rise regarding who will win the US Presidential election in just over two-weeks, and the implications for leadership and policy continuity at the Fed. Republican challenger Mitt Romney has pledged to replace Ben Bernanke as chairman of the Fed if he becomes President. Another generally disappointing EU summit has concluded, which once again failed to address the underlying imbalances at the core of the eurozone debt crisis. The euro and European stocks were pressured, amid heightened risk aversion. An agreement to make the ECB the supervisor of eurozone banks by year-end is being touted, but the market clearly doesn't share the enthusiasm of French President Hollande who declared, "Tonight, I have the confirmation that the worst is behind us." US equities are getting slammed as well, on the 25th anniversary of 'Black Monday', weighed by disappointing corporate earnings and persistent growth risks (despite this week's encouraging data points). This is resulting in some deleveraging pressures. Such pressures tend to support the dollar, and at least initially, suppress gold. Gold is proving far more resilient than silver on this decline. I suggested in commentary several weeks ago that the gold/silver ratio was trying to form a bottom below 51, in light of rising global growth risks. The ratio set a new seven-week high of 53.77 today, nearly 7% off the recent low. Peter Grant is USAGOLD's resident economist and a well-known analyst globally in the forex and precious metals markets. NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.
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