What goes up aggressively and makes a chain of new record highs holds the prospect of aggressive corrective action. In fact, if gold finishes the week at current levels, it will have dropped the most in a single week since last October!

In retrospect, the pendulum shift on US interest rate policy back toward the hawks, combined with a higher high in the dollar and a pulse higher in treasury yields, provides a bearish environment for gold and silver into the end of the week.

However, if recent gains were partially the result of flight to quality issues, we suspect some bargain-hunting buying will surface before the close today, but perhaps after additional declines...[MORE]

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