Gold: A Falling Knife

IAUNew York, May 15th ( – Gold is not a safe haven anymore, maybe it will be again, but it’s not right now. What the yellow is a risk asset. Add to the list of things that gold bugs don’t to hear the precious metal described, as is falling knife. As in gold keeps falling to the point that trying to call a bottom in this once prized commodity is akin to trying to catch a falling knife. Comex gold for June delivery slid another $3.90, or 0.3%, to settle at $1,557.10.


Once again, the U.S. dollar is doing gold no favors. As Europe’s trials and tribulations weigh heavily on the minds of traders across the globe, the dollar is proving to be the sturdiest of trades. As we noted in our oil recap, the PowerShares DB US Dollar Index Bullish (NYSE: UUP) surged three-quarters of a percent on volume that was better than triple the daily average. The ETF, which is essentially a tradeable version of the U.S. Dollar Index, reached its highest closing price since January.


Gold’s Tuesday closing price was a 19-week low and that comes a day after 2012’s gains were erased. Weakness in bullion has gold-backed ETFs in danger of violating key technical. With Tuesday’s drop, the iShares Gold Trust (NYSE: IAU) is getting ever close to $15. Another couple of bad days would have the SPDR Gold Shares (NYSE: GLD) back at its 52-week low.


Don’t look to other metals for any relief. Silver futures for July delivery dropped 1 percent to close at $28.08 an ounce on the Comex. The metal fell as low as $27.895, the lowest since Dec. 30, according to Bloomberg. The iShares Silver Trust (NYSE: SLV) lost another 2% today and that fund could easily see its 52-week low before this week expires. Investors have pulled $63.2 million from the ETF in past week, according data from ETF Channel.


The ETFS Physical Platinum Shares (NYSE: PPLT) extended its string of recent losses, falling another 0.42% today. Citing surplus platinum supplies and weak demand, Barclays and BNP Paribas lowered their price forecasts for platinum metals this year, but that didn’t keep the ETFS Physical Palladium Shares (NYSE: PALL) from a strong-volume gain of two-thirds percent. Both PPLT and PALL are holding more of their respective metals today than they were a year ago.


Ah yes, let’s talk about the miners. Maybe it was a blow off bottom, if there is such a thing, but the Global X Silver Miners ETF (NYSE: SIL) plunged 5% on volume that was better than double the daily average. New 52-week low club for the Market Vectors Gold Miners ETF (NYSE: GDX), which lost 4% on strong volume. On nearly triple the average daily volume, the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) lost 7.1% to sink to another all-time low.

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