At this point it looks like the gold market has priced in a far greater amount of tapering of bond purchases than is actually being discussed in polite circles — $10 to $15 billion per month.  The weakness in gold this week stems from both political incompetence in Washington prevailing over Syria and strategically-timed selling catching over-levered speculative longs with their pants down.  Last week’s COT report saw some 50,000 new spec. long contracts show up in gold.  I expect the report this week will show that most of them were wiped out this week.

Low U.S. unemployment applications and mild PPI numbers have investors in a bit of a risk-on mood which has given cover to attack the gold market even though we have seen a stronger Euro and Yen and a weaker US Dollar.  At this point any correlation argument for gold is a poor one as all of the traditional levers have broken down given the damage done to that market over the past six months and the immense bearish sentiment that exists outside of the physical buying crowd.

Meanwhile, we are seeing more and more market halts being declared.  We had one earlier in the week in gold, the moment at which the market was flooded with enough coordinated selling to break through the $1350 floor and begin this phase of technical selling.  Further weakness today is simply ensuring that Sunday’s Asian open will be weak to see follow-through margin selling ahead of the Fed’s meeting next week.