By Jon Nadler
Gold prices fell a tad for the first time in five, as the US dollar regained some ground against its rivals overnight. The greenback recovered against the euro and in New York early on Thursday, as euro zone economic data of the anemic variety gave rise to fresh apprehensions related to the on-going global recovery.

Such background conditions kept the euro from making fresh highs above the psychological $1.5000 mark. Meanwhile, the dollar index climbed 0.30 to 75.37 this morning. The pivot points of 75 on the index, $1.50 euro and $80 oil remain in sight but continue to present barriers that are hard to ignore by the spec crowd, and no convincing break-throughs have materialized above these key levels as yet.

It turns out that the number of Americans filing claims for jobless benefits last week fell according to this morning's data. The figures could be an indication that the worst employment contraction since WWII is turning. Initial unemployment claims fell by 12,000 to 502,000 in the week ended Nov. 7, the lowest level since January. Bloomberg reports that "Firings may slow as the loss of 7.3 million jobs since the recession began in December 2007 probably means many companies have already cut staff to bare minimums."

Meanwhile, gold's Wednesday rally continued running on the carry-trade fuel and lifted its 14-day relative-strength index, (a gauge of whether a commodity or security is overbought or oversold) basis spot, to above the level of 70 viewed by some investors as a signal for a retreat. Today’s index was 74.35, according to Bloomberg data. Here is the quick and dirty, from GoldEssential.com for the early hours of Thursday:

"Gold was seen hitting fresh record highs above the $1,120 an ounce mark early on Thursday in Asian trading, as the U.S. currency remained weak and as sentiment remained positive towards the yellow metal, although with traders commenting on the increasing risks for short-term top formation. "There were a few decent sized sell orders passing on our screens as the COMEX December contract fell back below $1,120 an ounce and later $1,117.00", he added. Technically, the December contract had now exactly hit its current Sept-Oct-Nov channel resistance, currently equally at $1,123.40 an ounce and rising by around $2.4 per day.

"The risk of short-term top formation is very real now", said Evelyne Winters at Goldessential.com, as both an overbought reading, nearby chart resistance, expected option plays at $1,100 an ounce and other very stretched tools could spark a short -term correction". Winters put forward a downside target of $1,151 initially, the channel bottom.

Moreover, one FX-trader said in an interview that "over the last few days, the dollar index has hit a fresh fifteen month low, although with the EUR/USD pair having thus far failed to take out its current yearly high at around 1.5061, and with here also the increasing risk of a forming "double top pattern’, which could spark reversal ."

The rest of the Thursday session was spent concentrating on additional profit-taking, as the euphoria that carried bullion briefly to a new record high ($1124.00 basis spot offer) quickly dissipated with additional speed following a more robust climb b the US dollar on the index (at last check up 0.51 at 75.59 and at 1.4868 against the euro). Gold was off $14.20 at last check, quoted at $1102.60, and threatening to break to under $1100.00 per ounce. Such mirror-image moves once again bear out just how much (okay, all) the move in gold can be interchanged with a dollar decline story and the resultant carry-trade gambling in the big casino in NY.

A hefty ($2.46 per barrel ) pullback in oil on the back of the rising dollar and a surge in US inventories also helped drag gold away from chalking up a sixth day of additional gains. Silver (losing 31 cents at $17.26) and Copper fell away on the day as well, as risk traders were spooked by the greenback's sudden gains. Platinum suffered a $17 drop to $1353 the troy ounce.

Palladium however, shone fairly nicely (rising $6 to $348) and rhodium popped $40 higher (touching the $2K mark). The former is getting some serious flirtatious nods from jewellers preoccupied with way too costly Gold and with the prospects of a bleak holiday selling season (discounts will be generous, and pervasive) - and are thus thinking "substitution" at the moment. But, we've already mentioned this (and rhodium's decent prospects) lately...

Somewhat "heretical" (given the current temperature readings in the bull camp) in nature words about gold were heard from a mining company (?!) CEO. Normally, all we get from the heads of mining firms are firm assurances that he rally in gold is basically permanent and open-ended, and, on occasion, we are also told that future gold price moonshots will also be predicated on dwindling mine output (although that kind of forecast is not exactly a good thing to mention if your stock values depend on healthy future production activities at your firm - but, hey). Anyway, whether his firm got religion (or not) before or after closing the hedge book, Barrick's chief opined overnight that:

"Gold may ease from current record highs but the chances of prices falling below $900 an ounce are slim, the chief executive of Barrick Gold Corp told the Financial Times. "There is no reason why we should expect gold not to sell off," the paper quoted Aaron Regent as saying. "It is a commodity like any other."

Gold shot up to another record at $1,121.60 an ounce on Thursday as a weaker U.S. dollar lifted the metal's appeal as an alternative investment to currencies. Bullion has now renewed record highs for six out of the past eight sessions. But Regent said forecasts of the long-term gold price falling below $900 an ounce were "on the light side", adding that bullion remained susceptible to sell-offs despite its bullish outlook. "

Wow. No 'gold is money' or 'gold is different' nod from this mention. Surprising.

Finally, let's look at the central bank gold buying/selling hoopla once again. Yes, it is another taboo to dismiss the Indian gold buying event as perhaps a less-than-significant happening given the emotional temperature out there in the gold market these days. Well, we've been know to talk in church. Even about s e x...

The subject at hand (not sex), this time as filtered through the sharp analytical eyes over at Belgium's GoldEssential.com. It is important to consider this alternative view, because the breaking story was being fed to the media and to uninitiated investors with the gravitas and rapturous overtones of 'a new era' that the landing of an alien civilization on Earth would be expected to result in:

" With much of the last weeks hunt for records in gold prices in part attributable to the market's altered expectations on central bank reserve allocation interest into gold, the question remains whether there any fundamental shift in central bank reserve exposure is imminent. Gold was seen rising above its previous record high of $1,072 an ounce nearly weeks ago, rising to $1,123.40 (COMEX Dec benchmark gold futures) on Thursday after India's Central bank recently announced it had bought 200 tonnes of the 403.30 available tonnes of IMF gold between Oct 19 and Oct 30.

While it may be true that some central banks may show interest in adding gold as a part of their reserves, it is important to look at the whole picture, said Matthias Detremmerie, director and precious metals analyst at Goldessential.com. The central banks that are touted as buying candidates are mostly limited to emerging countries such as China, Brazil
and Sri Lanka. Even India falls under this denominator.

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