NEW YORK (
) -- Spot gold traded slightly higher on Wednesday as the metal attempted to stabilize. Thus far, gold prices appear to be having a difficult time ending the recent hemorrhaging that the market has experienced. Although spot gold prices were a bit higher today, gold futures finished the day lower. The "Paper gold"
SPDR Gold Shares
was trading around the flat line, as of this writing.
Gold prices did not get any help today from outside markets. Crude oil once again traded sharply lower, and the U.S. dollar index was sharply higher. Stocks were bludgeoned on Wednesday and as of this post have given up almost all of yesterday's gains. The volatility we have seen the last few days could be indicative of a top in the equities markets and a shift to a "risk off" mentality.
In fact, the term deflation is now being tossed around again, as commodity prices continue to slide. Many investors look to "DR. Copper" as a barometer of economic activity.
Well, copper prices aren't doing so well lately, and if this is indicative of what is to come, then look out below. In addition, the IMF on Tuesday lowered its estimate for global economic growth in 2013 from 3.5% to 3.3%.
Clearly the threat of a global slowdown is real and is showing signs of coming to fruition despite all of the central bank money printing that has taken place.
Whether this works in gold's favor, at this point, is unknown. Gold has often been bought as a perceived safe haven, although at times, it has also been bought and sold just like any other risk asset.
The argument can certainly be made for buying gold in deflationary periods as well as inflationary periods. Time will tell.
For now, should commodity prices continue to slide and the dollar stay on the strong side, gold may have a tough road ahead to heal itself. Even with apparently good physical demand at current prices, should gold show signs of further downside, physical bullion buyers may elect to try to wait and thus the idea of lower bullion prices could become a self-fulfilled prophecy.
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This article was written by an independent contributor, separate from TheStreet's regular news coverage.