"This pullback finally encouraged a response from the physical community," Edel Tully, an analyst at UBS in London, wrote in a report. "Market participants are placing a lot of importance on physical buyers to step in and put a floor under gold. The physical response seen this week, though not yet enough to call a trend, should somewhat calm these investors."
In China, the second-largest consumer, gold imports to the mainland from Hong Kong surged 51 percent to 86.3 tons in October to a monthly record, according to the Census and Statistics Department of the Hong Kong government. China imported more than 300 tons for all of 2010, Yi Gang, People's Bank of China Vice Governor, said in February.
"Buying of that sort should have sent gold prices soaring," Gartman wrote. "One of the oldest rules of trading is simply this: a market that cannot or does not respond to bullish news is a bearish market not a bullish one."
The S&P GSCI Index of 24 commodities plunged as much as 66 percent in the seven months through February 2009 after Gartman in June 2008 said there would be a "tidal wave" of selling. The economist said Aug. 23 that gold was entering the stage when prices go "parabolic," two weeks before the metal peaked at its record high.