Bullion wrong foots bears as Gold and Silver reverse early losses

Neil Mellor, economist at BNY, characterised the foreign exchange markets as a "beauty parade with ugly contestants" in the London Evening Standard today, and never was there a more appropriate description. A steady stream of bad and terrible news hit currencies today leaving investors with few places to go.

The pound came under pressure after comments, from a Bank of England MPC member, that a double dip recession could not be ruled out.

Then as the Euro wilted under the glare of sovereign debt worries, the US dollar was hit by terrible housing news. A surprise fall in US existing home sales, falling 27%, more than twice the forecast to 3.83 annually, hit the greenback hard.

All of this erased and then completely reversed early falls in Gold and Silver bullion. Silver having fallen to below $17.80 by 1 pm in London, rebounded to above $18.35. Similarly, Gold prices, having fallen below $1211 per troy ounce to bounce back to over $1230, lent credence to the theory some analysts are proposing that precious metals are starting to behave as an alternative currency.