24 August 2011
Gold Plunge is Likely to Cause Hiatus in Coin and Bar Trading - But Not for Long
Gold took a hard kicking on Wednesday, and the coin and bar market looks likely to take a breather as the dust settles, but probably not for long.
Back in may as we published an article on the steep rise and very steep fall in Silver prices. Today we were almost tempted to run the very same article again, since today’s gold and silver price action looks almost like an exact re-run of Mays bullion price action.
The cause of the plunge this time was attributed to profit taking on overbought Gold, triggered by unusually strong 4% rise in US durable goods orders. Never mind that after stripping out the notoriously volatile Transport sector that, growth was cut to a meagre 0.7%. And never mind that the business investment plans category fell by 1.5%, the most in six months. And never mind that in separate numbers last week, applications for mortgages fell to their lowest level since 1996. The market was clearly looking for a reason to sell down Gold and Silver and it took that opportunity with both hands.
Many Gold and Silver Coin and Bar buyers immediately drew in their horns at today’s drop in prices. BullionSupermarket.com traffic was down around 20% on the day, with comparisons down even more. But a late flurry of activity indicated buyers were looking at the market with a view to trying bottom fish.
If the May 2011 pattern is repeated, the Gold and Silver bar and coin market will remain subdued until the dust settles, but also it will not take long for buyers to return to market.