1. Gold rises in inflationary times … but the inflation we have now is transitory,  its not going to persist (or so we are told).

2. Gold rises in times of low-interest rates, but central banks will soon be tapering and after that comes rate hikes (real soon if the RBNZ is anything go by, August 18 hike is expected).

OK, that’s 2,  and those factors have been evident for a while, although Friday’s US NFP brought them more into focus. But still, why has gold dropped this morning? Number 3 …

3. This time of the week is the worst for market depth. I warn of this my first Monday post every single week. There are not always sharp moves, most of the time its a bit quiet … but occasionally the low liquidity can see extended moves. In the US the big traders are still heading home from the Hamptons. In the UK/Europe they are in bed for an early start Monday. In Asia they aren’t out of bed yet (relatively small markets of Australia and New Zealand excepted).

Gold dropped under $1700: