Gold declined slowly but steadily from $920 in Hong Kong to $890 at the end Comex trading on Tuesday, and got but a slight lift on the Globex to finish at $897.30/oz., down $24.70. Overnight, gold has edged higher.

Platinum held up until New York opened, dropped off from there to the noon hour, then rallied back late in the day to end at $1041/oz., down $18. Overnight, platinum is trending higher.

Silver recapitulated gold’s chart, falling from above $12.90 in Hong Kong to below $12.50 as the Comex shuttered, then rallying a bit to close at $12.57/oz., down 37 cents. Overnight, silver has moved higher. (Click here for charts)

The precious metals took one to the chin again yesterday, with no sharp moves but just a steady price erosion.

While a dollar that slipped against the euro might have been supportive, retreating crude played against the metals, and an irrationally exuberant flood of money into equities likely drained enthusiasm as well.

And gold is battling a jewelry slump. “The Gold and Jewelry Group in Abu Dhabi has said that gold sales there slumped in January and February by 70% year-on-year,” Commerzbank analysts said. “While the group assumes that demand will pick up again if gold prices decline further, this could take several months more given the economic climate.”

Technicians were quick to jump on the day’s action, as they believe it important that gold has fallen beneath its 50-day moving average, which it had not done so far this year. That is a bearish signal, in their opinion, and sets up a test to see whether gold can recapture and hold the m.a. in the next few days. If not, the bears are calling for a prolongation and deepening of the downturn that’s been in place since the metal broke past $1,000/oz. just over two weeks ago.

“Gold is under pressure as money flows back into the broader market,” according to Kevin Kerr, editor of Global Commodities Alert.

In addition, Kerr said, “It seems that for the moment the inflation fears and systemic risk fears are starting to diminish and investors who have access to funds are starting to see opportunities in the other commodities as well as equities.”

But looking ahead, Kerr noted that, “Inflation remains a major problem down the road and all of this stimulus and printing of money is going to exacerbate it,” creating the strongest possible conditions for a prolonged gold bull market.

Source: Precious Metals Prices Prolong Downward Spiral

Last 5 posts by Doug Casey

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• Gold Pushes Through $950 - July 27th, 2009