Gold prices spiked and then gave back $6 during the Asian and early European sessions on Monday, opening in the US below $658.50 – its lowest weekly start since March 26th.
London's opening for gold in Pounds Sterling was the lowest Monday start in 7 weeks, down below £335.50 before dropping again £334.20 per ounce.
The Euro price of gold dipped below €490 per ounce, its lowest weekly start in more than two months.
"Despite the short term correction, gold continues to look vulnerable," said Brandon Lloyd in today's technical note from Mitsui, the precious metals trading group.
"If it breaks back down through $659 support then it will open for a clean out down to the $635-$630 area. The first resistance level currently sits around $672."
Other analysts cap gold's short-term scope more tightly still. (For gold's longer-term upside, click here...)
"Gold remains under pressure should it stay below the pivotal $665 level," says Standard Bank today.
"A move higher could encounter scaled up resistances from $662 to $665, with a break above $665 signaling a potential resumption of a bull run toward the $700 target."
Only 17 of the 32 professional traders and analysts surveyed by Bloomberg at the end of last week advised buying gold. Ten said to sell.
The mass of private investors has also turned bearish on the metal.
Investment in exchange-traded gold funds (ETFs) fell 68% during the first 3 months of the year, said the World Gold Council on Friday.
Year on year, purchases fell by one quarter.
But private investors are also selling off stock market investments right now, reports the Financial Times.
Despite fresh multi-year highs in the European indices, investors in Germany, Italy, Switzerland and Greece were net sellers of mutual funds for the fourth quarter running during the first 3 months of this year.
According to BVI, the German fund management association, German mutual funds' share of private savings had already fallen by more than one fifth in the year to June 2006. (How much longer might the global boom in securities prices roll on? Read more here...)
"There's very little reason to sell gold at the moment," as Koji Suzuki, a market analyst at Kazaka Commodity Co. in Tokyo told Reuters this morning.
Fundamentally, nothing has changed from two weeks ago, back when gold was challenging $692 for the third time in three weeks.
Suzuki also pointed out that gold held onto its recovery late Friday even after China announced a major shift in how the Yuan trades versus the Dollar.
Beijing will now allow the Yuan to move by 0.5% per day, rather than 0.3% as before.
The Chinese government is also getting into private equity, putting some $3 billion of its $1 trillion foreign currency reserves into Blackstone, the US buy-out company. (Read about China's demand for gold here...)
The Japanese Yen took a hit on the Chinese currency news, however, slipping to a fresh record low against the Euro.
The Yen also slipped versus gold in Tokyo overnight. The benchmark Tocom contract for April '08 delivery priced gold 0.7% higher at the equivalent of $668.76 per ounce.
This weekend's meeting of G8 finance ministers failed to discuss Japan's strategy of "competitive devaluation". With interest rates still at just 0.5%, the Yen continues to fund low-cost speculation in global asset markets.
The upshot for savers and investors everywhere? Click here to read more now...