At this point you are watching a trapped set of market shorts beat a tactical retreat away from a disastrous position that if the central banks on the other side of the trade wanted to could wipe them out (all of them) in about an hour.  But, since these same shorts allowed those central banks to accumulate tons of gold in the past month at stink bid prices they are obviously being gentlemanly in their caning.

Today was a perfect opportunity for serious ugliness to be dished upon those currently short the gold market but after a foray above $1616 last night around 1 am EDT, the bears began selling and the bulls let them do so, taking the price down in the moment before the COMEX open today to $1604 before being routed again by the bulls who are clearly in control of the market at this point.  For if they wanted do could have leaned on the price above $1610 and run gold back up to challenge $1620 and create a weekly close that would have tipped a whole lot of algorithms into buy-mode for Monday’s options on futures expiration day.

That would have been a fun Asian open to consider.  Frankly, the close at $1608.50 still sets things up well for next week and if the headlines coming out of Cyprus are not market positive we could still see a lot of fireworks on Monday, options expiration notwithstanding.

Silver was beaten back badly and was the means by which to keep gold reined in.  I’m still looking for a sustained move above $1620 before truly declaring a bottom is in. But, with the insanity that is prevailing in Europe and the sheer idiocy of the IMF to go along with the Europeans’ desire for self-immolation the odds are very high that it is.