by Alasdair Macleod, Gold Money:
This week the US dollar moved strongly upwards against the other major currencies, at the same time weakening gold and silver along with most industrial commodities, before some profit-taking set in yesterday.
The effect on precious metals is a change from previous weeks when a flight into dollars also supported gold and silver prices. Instead, gold and silver were noticeably weak until this morning, when prices recovered $8 and $0.13c respectively in early London trading. So what’s changed?
On examination very little has, other than a determination by liquidity providers in the futures markets to contain their short positions. In a market where speculators have little or no ability to judge value, emotion sets prices. This makes it easy for bullion banks with deep pockets to move the market and change sentiment. On Comexi this has led to a sharp reduction in outstanding gold open interest over the last fortnight as shown in the chart below.
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