From Ed Steer:

From the beginning of Globex trading in New York on Tuesday night, right up until the Comex open on Wednesday morning, gold quietly added about seven bucks to its price. At 8:30 in New York, there was a sell-off...and at exactly 9:00 a.m. the gold price began a move that tacked on about $12. The high-water market for the day was at the London p.m. fix an hour later [10:00 a.m. in New York...3 p.m. in London]. From there it traded sideways for the rest of the day. According to the usual N.Y. commentator..."estimated volume was a heavy 141,356 lots, with a 28.6% increase in the last half hour. The wary will note that world gold essentially moved sideways after a $12 jump between 9 and 10 a.m. NY time. Also, it actually lost ground in Euro terms during this time--in other words, it failed [or was not allowed] to reflect on-going dollar weakness."

The silver chart was a strange duck. From the opening of trading on Wednesday evening in New York, silver's low of the day came during lunch time in Hong Kong yesterday. From there, the price rose slowly for a couple of hours...and then fell slowly for a couple of hours. This happened five times during Tuesday's trading...in a more-or-less regular fashion. The high of the day was about the same time as gold...and by the time that electronic trading was over in New York yesterday, silver had gained a magnificent eleven cents. I was underwhelmed.

However, the HUI and XAU were on a tear yesterday...with the HUI up a wondrous 5.18%. Most of that gain occurred in the first hour of trading...with the absolute top coming less than half an hour after the London p.m. fix. We'll take it!

Tuesday's rather smallish gains in gold resulted in an increase in open interest of 2,300 contracts to 367,931, on real decent volume of 123,605 contracts...including switches. Silver had a much more substantial increase in price on Tuesday, but resulted in an increase in o.i. of only 1,406 contracts to 96,079, on a smallish volume of 16,030 contracts.

In other precious metals news yesterday, I note that the Central Bank of Russia has finally updated their website with the April numbers...and I see that they have, once again, increased their gold reserves by another 200,000 ounces for the second month in a row. Their current reserves are 17.1 million "fine troy ounces"...which is a hair under 532 tonnes. And the U.S. Mint has updated their gold eagle production for the third time in less than a week...which is very strange. This time they've added 9,500 to this month's total, which now sits at 63,000. There were no reported changes in silver eagle production. Wednesday's Comex deliveries in both gold and silver are not worth mentioning...and another 281,096 ounces of silver was added to the Comex-approved warehouses. GLD and SLV remain unchanged...although one would think with the activity of the last few days, that both ETFs would be owed something by now.

All eyes seem to be focused on what's happening with the U.S. dollar. There's no question that the 3-year chart posted below is an ugly one. The greenback is now well below its 200-day moving average. The next line in the sand looks to be slightly under 78 cents...which isn't too far off...considering the way it’s been falling. The question is...will it stop there?

click to enlarge

While I'm on the subject of the almighty U.S. dollar, I'd like to point out that the dollar could do absolutely nothing...and the price of gold or silver could still explode to the upside...or crash and burn. Please don't ever forget that two or three U.S. bullion banks are still in total control of these two markets. Their decision to go short [or not go short] is entirely what's driving the price pattern...either up or down. This rally we are now in, is the same as every other rally that we have ever had...and will end the same way...unless these American bullion banks change their modus operandi. It's as simple as that. So, let's enjoy the ride...but always be on the lookout for "in your ear." The HUI is up more than 100% from its October lows...but still looks like it has room to run...JPMorgan et al...willing.

Today's first story is from CNBC if you can believe it. As you know, I'm not a big fan of theirs, but they have this wonderful [and short] print version of what was obviously a TV interview with Jim Rogers that was done over in Asia. Mr. Rogers says all the right things that make my heart go pitter-patter...and I know it will for you too. I thank P.S. for sending it to me...and the link is here.

Here's a story that seems to be another brick in the wall for the U.S. dollar. It appears that "Brazil and China will work toward using their own currencies in trade transactions rather than the U.S. dollar..." The story is from the Financial Times in London and is headlined "Brazil and China eye plan to axe dollar"...and the link is here.

Today's last offering is a Bloomberg story filed from Dubai. The six nations of the Gulf Cooperation Council have been trying to create a monetary union of some sort for quite a while now. The bickering has been going on for years. Yesterday, the United Arab Emirates withdrew from negotiations. The story is worth your time. It's entitled "Saudi Arabia's Dominance in Gulf Challenged as U.A.E. Rebels"...and the link is here.

The dollar does look vulnerable...Pushing government steadily leftward, the Obama Administration has set up the possibility of a US dollar rout. This is especially so, noting that the US$ Index has now closed below its 200-day moving average for the first time in months. If this persists, commodity prices generally shall rise...and rise materially, and gold shall too. - The Gartman Letter, 20 May 2009

With the gold price now on the right side of $930, it will be interesting to see if the price will be allowed to add to its gains. All the conditions are in place for that to happen...it just remains to be seen if it will. Right now, gold is up $4.30 and silver is up 6 cents in early London trading, but the bullion banks on the Comex will decide gold's fate again today...and that will have happened long before I roll out of bed this morning.

All of us at Casey's Daily Resource Plus hope that your Thursday goes well, and we look forward to seeing you here early on Friday morning.

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.