By Jon Nadler
After trying to climb back to near $935 per ounce, gold prices gave way and dropped back to near where they left off in New York on Monday. A low of $917.20 was once seen overnight and prices encountered some support more from bellicose Iranian statements than robust Asian buying.

Falling oil values kept a lid on advances as Texas Tea pierced the $140 level at a time when the majority of players had expected it to have done the same to the $150 level. The US dollar however, was still marking time at near 72.80 and at 1.569 as Janet Yellen's vision of another rough patch coming up for the US economy kept dollar bulls on the nervous side.

Over in Japan, leaders of the G-8 voiced their "strong concern" about rising commodity prices, especially those of oil and food. In a statement released today, they said that commodity prices "pose a serious challenge to the world economy." They also said that they are determined to continuously take actions to ensure stability and growth of world economy. Let's see what that translates into where the rubber meets the road. The take-home finding here is that the G-8 leaders are in sync on the vilification on inflation as Public Enemy #1. Therefore, expectations that they might start acting accordingly are keeping interest rate watchers on extended work shifts.

New York's Tuesday trading session was off to a negative start, with bullion dropping $5.00 to $921.00 per ounce as participants were eyeing the upcoming release of US gasoline inventories figures (expected to show a rise as Americans drive less and do so in lesser (than immense) vehicles. Crude was trading at $139.05 at last check. Silver dropped another 23 cents on the open, quoted at $17.56 while platinum made up very little of yesterday's losses by rising $4 to $1959 and palladium lost $2 at $442 per ounce. Support for today's bullish crowd comes from Iranian war rhetoric that warns of a direct strike on Tel Aviv and the US ships in the area - if attacked. Meanwhile woes over at Fannie's and Freddie's financial houses kept pressure on related equities and traders nervous.

Automotive world news reveal a GM ready to write obituaries for some of its brands like it did with Oldsmobile, and looking to drop others such as SAAB (one of the better ones it owns). The noble metals might pin their hopes on production and sales overseas as North America undergoes a structural shift in personal transport. Minivans RIP, SUVs RIP. Trucks on life support. Marketwatch's Irwin Kellner feels that the foreign exchange value of the dollar is the critical component of soaring oil prices and that the two most effective ways of helping the current situation go away would be intervention (in the currency markets) and/or a hike (or series thereof) in dollar interest rates. Neither of them pleasant for some parts of the world or of the speculative crowd. Unless, of course, one is a gold speculator. At this time, some of them see nothing but bullish graffiti on the proverbial wall or worry. Which, is something to worry about.

In today's focus story, Marketwatch's Mark Hulbert is worried that the lack of worry among gold timing newsletters may yet have some of them suffer the same fate as the wise guy running ahead of the bulls this weekend in Pamplona, Spain. He is now a gutless runner. Mark reports:

"Almost all commodities fell markedly on Monday, and gold was no exception. Unfortunately for the gold market, contrarians would not be surprised to see more of the same. That's because sentiment among gold timers remains too frothy to support a significant rally.

Consider the latest readings from the Hulbert Gold Newsletter Sentiment Index (HGNSI), which reflects the average recommended gold market exposure among a subset of short-term gold timing newsletters tracked by the Hulbert Financial Digest. As of Monday night, the HGNSI stood at 64.3%.

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