Funny day. Commodities are melting down all of a sudden. Oil was above $83 earlier in the day; now were down a buck, down to $81.15. Gold is down at $1100 support again…

No clue what to blame it all on, though it does suggest risk aversion.

How to fund the coming European bailouts? Sell the family jewels. err, gold...Dennis Gartman says.

I’m not sure of the catalyst but gold has come under intense pressure over the last 45 minutes. It broke modest intraday support around the $1120 level after reaching session highs of $1127 just moments before..Stronger support at $1110 has given way as well. 1088 is the next decent area of support.We trade now at $1108 after bottoming at $1104.

UPDATE: We’re hearing speculation from AUD/USD traders that there has been central bank selling in gold in the last hour…

Gold is not trading as part of the risk trade today, slumping to the $1125 level at last look. Volatility in the yellow metal has been very low in recent weeks, surprising given the upheaval in the euro zone. Perhaps we can take gold’s weakness as a sign that the Greek crisis is moving toward a back-burner issue. I’m open to ideas from readers as I have no solid feel for that market at the  moment…

As noted earlier, the 50% retracement of the $1225/1044 decline comes in at the $1134.75 level. The high so far? $1135.30. A close above would be quite bullish and could be a sign that the dollar rebound is losing steam. Maybe. If old correlations hold up…. A big if, in a brave new world of sovereign debt crisis…

That seems to be the feeling this morning as gold reasserts its traditional safe-haven role as the market questions the sustainability of nations borrowing and spending their way to prosperity.

EUR/USD is racing higher along with gold as the battle of the “big uglies” continues. The market is having a tough time deciding if the euro, pound or dollar is the worst of the major currencies. Given the dollar’s reserve status, it generally seen as slighty less ugly than the others, but pretty butt-ugly in an absolute sense…

Gold trades now at $1132, closing in on the 50% retracement of its fall from $1225 to $1044 which comes in at $1134.75,

Gold looks to have donned its traditional safe-haven cloak today and is rallying despite soft US economic data and the dire fiscal situation in Europe that in recent days has prompted risk aversion and gold sales.

We are up to $1107 from lows around $1090 earlier today.

EUR/USD is seeing another round of short-covering and trades now at the 1.3520 level.

Gold trades well below $1100 this morning after the China Daily reported that China will not be a buyer of the IMF’s remaining gold stash. India is still thought to have interest, however.

Chalk up some of the earlier AUD weakness to that news, as well as talk that China may experience a burst debt bubble of its own in coming years.

AUD/USD trades in the 0.8915 area after sliding below 0.8880 support earlier in the session on US investment bank sales. Gold is at $1093.50, having traded as low as $1090.50 earlier.

Remember when the dollar was being dumped because it was no longer a “store of value”?

Gold was at $1225, EUR/USD was above $1.50, headed for $1.60 and beyond.

Lo and behold, several months later it is the euro which is now losing its street cred. The price of gold as priced in EUR just reached a record of EUR 825.96 an ounce, according to Reuters. The dollar is strong like a bull relative to gold, more than $100 below its peak.

At some point, the central banks, which are loaded to the gills with EUR may begin to get nervous…Does that scenario sound familiar? It’s a euro crisis!

Traders continue to avoid the EUR when putting on the “risk trade” which should put ever greater volumes in the AUD/USD market. That will likely add to volatility for Oz but making for even more spirited trade.

S&P futures are recovering their overnight losses, now down only 3 points after being down sharply overnight. Gold is in recovery mode, up to $1115 from $1100 lows and oil is back in black after a slide on the stronger dollar overnight.

EUR/USD is stable at the 1.3520 level. AUD/USD is firm at 0.8933.

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